AG-ECO NEWS
Jose G. Peña
Vol. 23, Issue 13
Professor & Extension Economist-Mgmt.
April 23, 2007
Implementation of NAFTA Nears Completion
U.S. Ag Trade with Canada and Mexico More than Doubled
Jose G. Peña, Professor and Extension Economist-Management
With the North American Free Trade
Agreement (NAFTA) nearing full implementation,
agricultural trade with Canada and Mexico has more
than doubled since NAFTA took effect in 1994. (Figure
1A). The last of the transitional trade restrictions will
be removed, effective January 1, 2008. During the 15year implementation transition period to eliminate
numerous barriers to regional commerce, agricultural
trade within the Canada/Mexico/U.S. free-trade area has
Figure 1B: U.S. Im ports And Exports To and From
M exico
B illio n D o lla rs
1 2 .0
E x po rts to M e x ic o
experienced rapid growth. Canada and Mexico are now
10.6
Im po rts fro m M e x ic o
1 0 .0
9 .4
8 .5
the 1st and 2nd U.S. trading partners, moving ahead of
8 .0
7 .4 7 .2
6 .0
Japan.
5.4
3.8
4 .0
3.0
2 . 32 . 2 2 . 5
Increased U.S. international trade dependence
3.6
2.4
2.7
3.8
3.5
2.9
6.3
5.6
5.2
4.6
4.7
3.8
7.3
6.4
6.2
4.9
9.4
8.3
7.9
5 .3 5 .5
5.1
4.1
2 .0
indicates that the suspension of the Doha Round of
trade negotiations at the World Trade Organization
(WTO) in Geneva last July, after 5 years of
0 .0
1990
1994
1 4 .0
American Free Trade Agreement-Dominican Republic
1 3 .4
I m p o rt s f ro m C a n a d a
1 2 .0
9.9
6 .0
4.6
4.2
3 .2
8.7
8.1
7.8 8.0
7.6
7.4
7.0 7 .1
6 . 86 . 8
6.1
5 . 6 5 . 85 . 6
5.3
5 .3
4.9
4 .7
4.1
10 .4
9 .3
9 .7
8 .7
3.0
2 .0
0 .0
will be phased in over the next 20 years and will create
1 2.3
1 1.9
1 1 .3 1 1 .5
10.9
8 .0
4 .0
(CAFTA-DR) was implemented in 2007. CAFTA-DR
2006
B illio n D o lla rs
1 0 .0
like NAFTA, substantially more important. The Central
2002
F ig u r e 1 C : U .S . Im p o r ts A n d E x p o r ts T o a n d F r o m
C anada
E x p o rt s t o C a n a d a
negotiations, makes viable regional trade agreements,
1998
1990
1994
1998
2002
S o u rc e : F o r e ig n A g ric u ltu ra l T r a d e o f th e U n ite d S ta te s , C a le n d a r Y e a r, U S D A /E R S
new trade opportunities and challenges for U.S.
agriculture.
2006
Regional market integration, one of NAFTA’s primary objectives, has been a major accomplishment and the
process is still ongoing. Almost all agricultural trade within the NAFTA region is free of tariffs and quotas .
Numerous restrictions were eliminated immediately upon NAFTA’s implementation, while others were phased out
over periods of 5 or 10 years.
The region has combined to form a single market, with agricultural imports from NAFTA trading partners
increasing nearly 800% since 1980. Canadian and Mexican industries, which rely on U.S. agricultural inputs, have
expanded. U.S. feedstuffs have facilitated a marked increase in Mexican meat production and consumption, and the
importance of Canadian and Mexican produce to U.S. fruit and vegetable consumption is growing. US agricultural
exports to Mexico have tripled to about $10.6 billion since NAFTA was implemented in 1994 (Figure 1B).
Agricultural exports to Canada have more than doubled, reaching $11.9 billion in 2006 (Figure 1C).
U.S. agricultural imports have also grown, with imports from Mexico more than tripling to $9.4 billion and
imports from Canada doubling to $13.4 billion in 2006. That same year, the United States had an agricultural trade
surplus of $1.4 billion with Mexico and a trade deficit of $1.5 billion with Canada.
NAFTA is in its final stage of full implementation with trade restrictions on a handful of agricultural
commodities, such as U.S. exports to Mexico of corn, dry edible beans, and nonfat dry milk and Mexican exports to
the U.S. of sugar, cucumbers, and sprouting broccoli, scheduled to be removed during early 2008. Similar but not
identical restrictions on Canada-Mexico trade also will be removed in 2008.
Employment - Consumer Benefits
Agricultural trade with the NAFTA countries is an important generator of U.S. employment. According to a
recent USDA-ERS research report, input-output analysis suggests that U.S. agricultural exports to Canada and
Mexico supported about 268,000 jobs throughout the U.S. economy in 2005. In addition, as NAFTA U.S. tariffs have
declined, more fresh produce has entered the U.S. market from Mexico and Canada. These new and additional
products have reduced consumer food costs, helped keep inflation lower than otherwise and led to higher living
standards nationwide.
Appreciation is expressed to Dr. Parr Rosson, Extension Economist Director, Center for North American Studies for his contribution and to review this article.