Amazon.com is superior to Amazon.ca in several ways. Firstly, it has a much broader selection. Secondly, it has some special features, like the Amazon Prime subscription that gives you unlimited shipping for $79 a year. The process of ordering things from Amazon.com, having them sent to places in the US, and then having them relayed to me has left me wondering what the effect of a true North American Free Trade Agreement would be.
In the simplest form, it would work like this:
- Anyone in Canada, the United States, and Mexico can purchase anything sold by any company in any of the three countries.
- The item can be shipped directly to them, and they will not be charged any customs fees, duties, or other border-related charges.
- Some simple system is sorted out for sales taxes. It could be (a) you pay the tax of your local jurisdiction, which may send part of the revenue to the sending jurisdiction (b) you pay the tax of the sending jurisdiction or (c) you don’t pay sales tax.
Such an arrangement would obviously be beneficial for consumers. They would be able to buy from whatever physical or web-based store offered them the best arrangement. It’s less clear what the effect on businesses would be. Those that benefit from having consumers who are more likely to buy from a firm in their own country would get hurt, at least temporarily. Those that would be more attractive to outside consumers in the absence of duty fees would likewise benefit in the near-term. In the near term, this alternative approach should produce net economic benefits. While some actors would lose the benefits of a captive market (like drink sellers at concerts), the larger market would be more efficient overall.
In the longer term, there would be effects on firm consolidation, tax revenues, currency values, and macroeconomic conditions. Both from the perspective of what would benefit readers personally and from the perspective of what would be best for society overall, would readers prefer (a) for the current system to continue (b) having the current system replaced with one akin to the one above or (c) getting rid of North American free trade entirely?