A free trade agreement supports global free trade since trade barriers tend to divert
trade in favor of members, but not reduce imports. The term: 'mutual assured deterrence'
is used to refer to a regional free trade association that has the feature that no
member can gain individually from the imposition of a barrier against a non- member.
Mutual assured deterrence is shown to be possible for a surprisingly rich set of
partners. A customs union is compatible with global free trade if the vast majority
of trade takes place naturally within the confines of the association. A customs
union that is likely to have this property would combine countries to form a nearly
exact economic replica of the globe. The economic combination of Mexico and the United
States doesn't form a replica of the global economy because, compared with Asia,
North America has relatively high capital per worker even after adding the Mexican
workforce. However, NAFTA does seem to have the property of mutual assured deterrence,
and may for that reason amount to a commitment to global free trade as well as regional