NAFTA in the World Economy: Lessons and Issues for Latin America

Abstract

This chapter discusses the nature of NAFTA, how it might evolve both institutionally and geographically, and what its effects might be. It also outlines how Canadian interests may diverge from those of the United States, and in this context considers the costs and benefits of additional Latin American nations joining NAFTA, including the social implications. The chapter is organized as follows: section 2 discusses what NAFTA is and what it is not; section 3 examines potential expansion of NAFTA (with a particular emphasis upon the role and characteristics of US policy); and section 4 considers NAFTA in the world economy. My main conclusions are:

• 1. NAFTA membership will not be an easy solution to Latin America’s current economic problems. The economic gains are likely to be limited, and membership will, in fact, preclude many of the governmental policies that originally enabled all today’s major industrialized nations, as well as the newly industrialized nations of Asia, to become what they now are.

• 2. The future of NAFTA and its implications for the Americans and the world trading order will depend primarily on what the United States decides is in its own interests.