The Impact of the Canada-United States Free Trade Agreement on U.S. Wine Exports

On 1 January 1989 the Canada-United States Free Trade Agreement went into effect. The agreement reduced the restrictions on the importation and marketing of wine produced in the United States. This article analyzes the impact lessening on United States wine exports to Canada. A demand relation for United States exports to Canada is estimated and then used to decompose the effects into their proximate causes. These causes are (a) own-price and exchange rate effects, (b) substitute price and exchange rate effects, (c) changes in real income in Canada, (d) tariff removal effects, and (e) removal of nontariff trade barriers by Canada