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Toward a North American Security Perimeter? Assessing the Trade and FDI Impacts of Liberalizing 9/11 Security Measures

Author

Listed:
  • Patrick Georges

    (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON)

  • Marcel Mérette

    (Department of Economics, University of Ottawa, 55 Laurier E., Ottawa, Ontario)

  • Qi Zhang

    (Department of Economics, University of Ottawa, 55 Laurier E., Ottawa, Ontario)

Abstract

This paper examines, for the first time, the trade and FDI impacts of a North American Security Perimeter that would liberalize the post 9/11 security measures at the Canada-US border. First, the study estimates econometrically the impact of post 9/11 security measures on bilateral (US-Canada) trade flows using a gravity model. Second, using these econometric estimates together with a three-region nine-sector general equilibrium model, we compute sectoral tariff rates “equivalent” to the 9/11 security measures. Finally, we assess the (general equilibrium) impacts on trade and FDI of a change of security paradigm toward a North American Security Perimeter. The paper shows that the economic opportunity gains occurring to Canada and the US from the liberalization of the 9/11 security measures amount to US$20 billion annually. This figure, once added to the direct administrative costs of the post 9/11 security measures, warrants serious consideration in policy discussions of a North American Security Perimeter.

Suggested Citation

  • Patrick Georges & Marcel Mérette & Qi Zhang, 2012. "Toward a North American Security Perimeter? Assessing the Trade and FDI Impacts of Liberalizing 9/11 Security Measures," Working Papers 1204E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1204e
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    References listed on IDEAS

    as
    1. Lakatos, Csilla & Terrie Walmsley, 2010. "A Global Multi-sector Multi-region Foreign Direct Investment Database for GTAP," GTAP Research Memoranda 3197, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    2. Patrick Georges, 2010. "Dispensing with NAFTA Rules of Origin? Some Policy Options," The World Economy, Wiley Blackwell, vol. 33(11), pages 1606-1637, November.
    3. Stephen S. Golub, 2003. "Measures of Restrictions on Inward Foreign Direct Investment for OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2003(1), pages 85-116.
    4. Trien T. Nguyen & Randall M. Wigle, 2011. "Border Delays Re-Emerging Priority: Within-Country Dimensions for Canada," Canadian Public Policy, University of Toronto Press, vol. 37(1), pages 49-59, March.
    5. Grady, Patrick, 2009. "Were Canadian Exports to the U.S. Curtailed by the Post-9/11 Thickening of the U.S. Border?," MPRA Paper 21047, University Library of Munich, Germany.
    6. Patrick GEORGES & Marcel MERETTE & Yazid DISSOU, 2008. "Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis," EcoMod2008 23800043, EcoMod.
    7. Michael Burt, 2009. "Tighter Border Security and Its Effect on Canadian Exports," Canadian Public Policy, University of Toronto Press, vol. 35(2), pages 149-169, June.
    8. Steven Globerman & Paul Storer, 2009. "Border Security and Canadian Exports to the United States: Evidence and Policy Implications," Canadian Public Policy, University of Toronto Press, vol. 35(2), pages 171-186, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Shahrokhi Shahraki, Hamed & Bachmann, Chris, 2019. "Integrating a Computable General Equilibrium model with empirically calibrated transportation models for border crossing investment analysis," Research in Transportation Economics, Elsevier, vol. 78(C).
    2. Georges, Patrick & Mérette, Marcel, 2011. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Conference papers 332084, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Foreign Direct Investment; Trade Flows; Post 9/11 Security Measures; North American Security Perimeter; Gravity Model; General Equilibrium Modelling.;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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