Effects of the Canada-United States Free Trade Agreement on Interprovincial Trade

The objective of this study is to examine the impact of the Free-Trade Agreement (FTA) on interprovincial trade. It first reviews some previous work on the effects of trading blocs on trade volumes. Section 3 contains aggregate evidence about the links between post-FTA movements in interprovincial trade and province-state trade. Section 4 analyzes new industry-level data designed to show whether the post-FTA changes in trade mix are consistent with interprovincial trade creation, trade diversion, or neither. Finally, Section 5 summarizes the two strands of evidence and sets some objectives for future research.