"Mexican real GDP increased 5.2 percent, and the real value of the peso was quite high in 1994, both factors that would have boosted U.S. exports to Mexico. As a result, it is unlikely that NAFTA and its lower trade barriers were the only influence on bilateral trade flows. To isolate the effects of NAFTA, one must account for the effects of changes in income, exchange rates, and trade with other countries; only then can NAFTA trade be ascertained."
(David M. Gould "Has NAFTA changed North American trade?" Economic & Financial Review, 1998, issue Q 1, pages 12-23) Using a gravity model Gould found that U.S. export growth is about 16.3 percentage points higher per year with NAFTA. The increase in exports to Canada was estimated to be 8.6 percent due to NAFTA - which is not too surprising given the the US and Canada had a free trade agreement in 1989. Also, in the winter 2001 issue of The Journal of Economic Perspectives, Burfisher, Robinson, and Thierfelder in "The Impact of NAFTA on the United States" concluded that "the mainstream forecasts during the NAFTA debate were basically correct: NAFTA has had relatively small positive effects on the U.S. economy and relatively large positive effects on Mexico." Scott Merryman On Wed, 24 Apr 2002, Wei Dai wrote: >According to http://www.ustr.gov/naftareport/intro.htm: During NAFTA's first five years, U.S. merchandise exports to Mexico increased 90 percent. U.S. merchandise exports to Canada, our largest trading partner, increased 55 percent. Together, this meant $93 billion in export growth from 1993 to 1998-two fifths of the growth in U.S. exports to the world. (end quote) The U.S. GDP is only $10 trillion so the $93 billion increase already represents a 1 percent increase. Where does the 0.1 to 0.2 number come from? Is Paul Krugman saying that even without NAFTA, U.S. export to Mexico and Canada would have increased by $80 billion?
