Undergraduate thesis submitted to the Vancouver School of Economics at the University of British Columbia in partial fulfilment of the requirements for the degree of Bachelor of Arts Honours in Economics.
The United States’ decision to renegotiate the North American Free Trade Agreement (NAFTA) represents a shift in the global governance of trade policy from mere tariff reduction towards “comprehensive,” or “ambitious,” free trade agreements (FTAs). This paper asks: What are the domestic and international factors that have resulted in the United States’ decision to renegotiate NAFTA? This paper argues that the U.S. decision to renegotiate NAFTA cannot be explained by a single mono-causal factor. Instead, a combination of domestic and international factors were key in the U.S. decision to renegotiate NAFTA. International factors include regime change, centralization of state power in international agreements, and a country’s relative terms of trade as a measure of a state’s competitive economic dominance. Domestic factors include a state’s internal institutional structure, income distribution, political cleavages, and voter perception. This paper identifies the potential factors that persuades a state to renegotiate FTAs.
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