Economic Integration Reconsidered

Economic integration refers to the various types of agreements coordinating economic policies and regulations between countries. There has been a rapid increase in the number of regional trade agreements (RTAs) since the mid 1990s and appetite for deep integration was reflected in the growth of European Union (EU) membership. However, the rejection of the Trans-Pacific Partnership by the United States and the United Kingdom's rejection of the EU common market are symptomatic of a new anti-integration wave. In this address, I discuss the roots of anti-integration sentiments and I review the economics of integration, the measurement and sources of the gains from trade, and trade policy. Canada has much to gain from securing RTAs with large countries like the United States, the EU, and, eventually, with Japan and China. The North American Free Trade Agreement made winners and losers, but long-run gains more than made up for short-run pains. Thus, there is no economic justification for maintaining interprovincial and international trade barriers in some of Canada's agri-food industries.