NAFTA Сase Study

University:
The University Of Western Ontario
Course:
ECON 2260B | Intermediate Microeconomics
Academic year:

2023
Views:

79

Pages:

2
Author:

Kyuwon J.

● Overall upward trajectory ○ During 20 year bloc profit between NAFTA/USMCA partners Fluctuations ● 2008-2009 crisis ○ Contraction in global demand, credit market has collapsed ○ Downturn in manufacturing ○ Decreased spendings ○ Steep drop across all partners ○ Rebound in 2010 - significant for US ○ Recovery ■ Stimulus measures ■ Bailouts (Auto industry in US) ■ Gradual restoration = consumer confidence ● 2015-2016 ○ Dip in Canadian export ○ Impact in US + Mexico ○ Just a slowdown not notable economic crisis like leman ○ Due to global oil crash (>$100/barrel => $30/barrel) ■ USD had strengthened during this period ■ US export became more expensive + effect in demand ● 2020 COVID ○ Global pandemic ○ Significant decline in all three partners ○ Lockdowns border restriction caused disruption in manufacturing industry ○ Supply chain slowed down or collapsed ○ Oil price has turned negative ■ Canadian export earning in impact ○ Medical supply in spike Key trends ● US dominance ○ Export of US product has constantly the highest ○ Surge in 2009-2011 ■ Recovery from the global financial crisis ● Canadian ○ Values hover in $300-350 range ○ Modest growth, modest dip in 2008-2009 crisis and 2015-2016 oil slump and 2020 pandemic ● Growth rate of Mexico had shown significance ○ Started near $150B in 2000 ○ Raised to $300B in 2019 ○ Largest proportion gain amongst three Economic interpretation ● NAFTA roles ○ Consistent upward pressure ○ US gain in advantage from NAFTA ○ Mexico’s rapid rise ■ Manufacturing supply chain integration ■ Electric + auto ○ Seen in 2009 crisis NAFTA was significant in recovery ■ Has given positive in longterm effect ● Structural shift ○ Export of Mexico had grown ■ Diversification to higher tech manufacture goods ■ Canada slower growth = more resource oriented export ■ Vulnerable to global price cycle ● USMCA ○ After 2018 agreement maintaining trade until COVD-19 ○ Trade agreement has given growth in export ○ Also gave cyclical shock ■ Financial crisis ■ Pandemics Canadian trade values has not benefited that much compared to US and Mexico ● In 2020 drop longterm positive ● Structural trade durability ● Tariff elimination has created in baseline in low trade barrier