Trade openness can be a powerful driver of economic growth, which is indispensable to reduce poverty and foster development. Trade, however, is not a silver bullet for achieving development. There is no way around the other institutional, macroeconomic, and microeconomic conditions that, along with well designed social policies, must also be met to attain development.
Has the North American Free Trade Agreement (NAFTA) fulfilled its promise? NAFTA was conceived first and foremost as an instrument to promote trade and investment integration among Mexico, Canada and the United States — on the premise that integration would enhance growth, employment and competitiveness in the three countries. On that front, NAFTA certainly has led to more intense and closer integration.
Goods and services are increasingly produced in international supply chains and networks, with firms supplying inputs that are processed in another country and then shipped to one or more other countries. Each stage of the supply chain requires efficient logistics and other services to move products across borders. To be relevant to the needs of companies that are engaged in supply chain production, trade negotiations need to focus on a broad range of policies.