The North American Free Trade Agreement: A Market Analysis

The North American Free Trade Agreement (NAFTA) was the subject of heated debate in the United States Congress. The central issue of the debate was whether NAFTA would have a positive or negative economic impact on the parties to the treaty. This Article is a direct empirical market analysis that measures the perceived economic impact of NAFTA on the parties to the agreement and other states. The authors use stock market event analysis to study the effect of NAFTA on different sectors of the economy of the United States, Mexico, Canada, Europe, and the Asia/Pacific region.

In doing so, the authors test the hypothetical predictions of other scholars and conclude that, contrary to speculation, NAFTA has had no meaningful economic impact on the economies of the United States and Canada, a strong positive economic effect on Mexico's economy, a slight positive economic effect on Europe, and a slight negative economic effect on the Asia/Pacific region.