CANADA INTERESTS IN NORTH-AMERICAN ECONOMIC-INTEGRATION

The current North American Free Trade Agreement (NAFTA) promises to ha ve relatively modest short-run economic impacts on the Canadian econom y, reflecting existing limited trade and investment flows between Cana da and Mexico and relatively low tariff barriers on many products. In the longer run, Opportunities exist for increased trade in services, p rimarily through the establishment of affiliates within the partner co untry. The liberalization of Mexico's investment regime in a number of service areas therefore represents a significant potential economic o pportunity for Canadian firms. Other arguable benefits for Canada incl ude an expedited dispute resolution process, clearer rules-of-origin, and constraints on adverse intrusion of regulatory processes as they a ffect Canadian-owned businesses. These gains come at comparatively low cost, most notably a higher domestic content requirement for motor ve hicles.