Initiating U.S. Free Trade Agreements: How Do Potential Partners Stack Up?

Abstract

We use fitted values from a standard gravity equation to rank countries as possible U.S. free trade agreement partners based on trade and investment potential. The European Union and Japan are ranked highest based on this methodology and individual Bush administration FTA initiatives generally generally are ranked very low. However, the combined affects of completed and proposed Bush FTAs have the potential to rank almost as high as the EU and Japan separately. This result is consistent with the view that, despite widespread criticism of the Bush administration's choices of FTA partners, the overall impact may be significant.