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The North American Free Trade Agreement: Implications for the Partiees and World Oil Markets

Abstract:
The proposed North American Free Trade Agreement (NAFTA) has been criticized because it failed to open Mexico's hydrocarbon reserves to development by private parties. This failure is an economic tragedy. Consumer welfare will clearly be reduced as a consequence. However, the loss is confined to Mexico where economic growth rates may be reduced by as much as one half of one percent per year. Otherwise, the agreement will have insignificant impacts on the world oil market. Future levels of production and prices will be unaffected by the agreement.

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Energy Specializations: Petroleum – Policy and Regulation; Natural Gas – Policy and Regulation; Electricity – Policy and Regulation; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

Keywords: NAFTA, Mexico, Oil, Foreign investment, Welfare

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No3-4


Published in Volume14, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.