ABSTRACT
The North American Free Trade Agreement (NAFTA) came into effect in 1994, providing tariff-free trade for the overwhelming majority of goods and liberalized trade in some services among the United States, Canada, and Mexico. Starting in 2015, the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) created a single market among the 10 ASEAN states. While the two trade bloc regions are a half a world apart geographically, they have some strong similarities. Among them is a high share of intermediate goods in within-bloc trade, leading to integrated production rather than exchange of finished goods among the member states. This high level of integration requires the establishment of efficient supply chains across international borders. This chapter explores the similarities between these two preferential trade agreements. Cross-border supply chains are considered in the context of the NAFTA and AEC cases. Like the AEC, NAFTA has significant differences in input costs – especially the cost of labour.
