15 years later NAFTA providing trade benefits

NAFTA is 15 years old and scheduled for full implementation in January 2008.

The North American Free Trade Agreement took effect in 1994, says Texas Extension professor and economist Jose Pena, Uvalde, and during that time, “agricultural trade with Canada and Mexico has more than doubled. Canada and Mexico are now the number one and number two U.S. trading partners, moving ahead of Japan,” Pena says.

The importance of NAFTA and other regional trade agreements takes on added significance, he says, in light of the suspension of the Doha Round of trade negotiations. He says NAFTA and the Central American Free Trade Agreement-Dominican Republic, implemented in 2007, offers “mew trade opportunities and challenges.”

Pena says NAFTA has provided benefits to all three participating countries. “Almost all agricultural trade within the NAFTA region is free of tariffs and quotas. Numerous restrictions were eliminated immediately after NAFTA’s implementation; others were phased out over five to ten years.”

He says the region has become a “single market. Agricultural imports from NAFTA trading partners increased nearly 800 percent since 1980. Canadian and Mexican industries, which rely on U.S. agricultural inputs, have expanded U.S. feedstuffs and facilitated a marked increase in Mexican meat production and consumption. The importance of the Canadian and Mexican produce to U.S. fruit and vegetable consumption is growing.”

He says U.S. agricultural exports to Mexico have tripled to about $10.6 billion since NAFTA was implemented. Agricultural exports to Canada have more than doubled, reaching $11.9 billion in 2006.”

The United States also buys more from both countries. “Imports from Mexico tripled to $9.4 billion and imports from Canada have doubled to $13.4 billion.”

That was in 2006 and the U.S. had an agricultural trade surplus with Mexico of $1.4 billion and an agricultural export deficit of $1.5 billion with Canada that year.”

Pena said NAFTA is in its final stage of implementation. Trade restrictions remain on a few products: corn, dry edible beans and nonfat dry milk from the United States to Mexico and Mexican exports of sugar, cucumbers and sprouting broccoli to the United States.”

Those restrictions are set to expire early in 2008. “Similar but not identical restrictions on Canada-Mexico trade also will be removed in 2008,” Pena said.

He said the agreement benefits all three countries and for the United States the advantages go beyond the farm gate to consumers who have lower food costs and lower inflation.

“According to a recent USDA-ERS research report, an 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.”

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