Trade Integration for the Americas: What Can Economic Analysis Tell Us?

Much recent discussion- both analytical and polemic- has centered around the general topic of trade integration of the Americas and various forms of trading arrangements that such integration might take, including such diverse arrangements as the MERCOSUL, NAFTA, the proposed FTAA, CAFTA, the United States bilateral FTAs with different countries, etc. The paper presents an analytical discussion of the economic benefits and costs of such arrangements. The use of computable general equilibrium (CGE) models is discussed, and a presentation is made of various simulation results. In general, the analytical findings are that the FTAA would bring greater benefits to its members than bilateral FTAs, but a successful Doha Round could bring even greater welfare improvements for Western Hemisphere countries