NAFTA as a Means of Raising Rivals' Costs: A Comment

The purpose of this comment is toclarify and extend a recent paper entitled “NAFTA as a Means of Raising Rivals Costs”. The paper indicates that the complexity of complying with the rules of NAFTA may lead to a decrease in competition in the domestic market. The comment shows that thecomplexity of NAFTA is related to the rules of origin which are a part of virtually any free-tradeagreement. Since rules of origin are a necessary part of virtually any trade agreement, the conclusions of the paper are not restricted to NAFTA but can be generalized to a large part of international trade.