Agriculture in a North American Free Trade Agreement: Analysis of Liberalizing Trade Between the United States and Mexico

This report provides some background information and analysis on the agricultural aspects of a hypothetical North American Free Trade Agreement (NAFTA) in which all barriers to trade are removed. Negotiations toward a NAFTA are important because (1) the United States, Mexico, and Canada are major agricultural trading partners, (2) border protection remains high on some agricultural products, and (3) there is a need for clarity and transparency in trade negotiations. Complete bilateral elimination of Mexican and U.S. border protection for agricultural trade over a transition period would expand agricultural trade of both countries. If recent levels of protection were removed, U.S. agricultural exports to Mexico would expand about one-third, while Mexican agricultural exports to the United States would increase about one-fifth by the end of the NAFTA implementation period. Thus, agricultural trade, which has been about equal between the two countries in recent years, would tend to favor the United States in the trade balance at the end of a transition period