Nafta

A Report from the Economic Research Service

United States Department of Agriculture

www.ers.usda.gov

WRS-09-03 March 2009

NAFTA at 15

Building on Free Trade

Steven Zahniser and Zachary Crago* Abstract

Implementation of the agricultural provisions of the North American Free Trade Agreement (NAFTA) has drawn to a close. In 2008, the last of NAFTA’s transitional restrictions governing U.S.-Mexico and Canada-Mexico agricultural trade were removed, concluding a 14-year project in which the member countries systematically dismantled numerous barriers to regional agricultural trade. During the implementation period, the agricultural sectors of Canada, Mexico, and the United States have become much more integrated. Agricultural trade within the free-trade area has grown dramatically, and Canadian and Mexican industries that 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. Keywords: North American Free Trade Agreement, NAFTA, Canada-U.S. Free Trade Agreement, CUSTA, Canada, Mexico, United States, trade, investment, transportation.

Contents

Introduction. . . . . . . . . . . . . . . 3 What Is NAFTA? . . . . . . . . . . 4 Overview of North American Market Integration . . . . . . . . 8 Rising Demand Drives Integration of Grain and Oilseed Markets . . . . . . . . . 15 Livestock and Animal Product Markets Undergo Further Integration . . . . . . . . . . . . . . 20 An Integrated Fruit and Vegetable Market . . . . . . . . 26 Resolution of U.S.-Mexico Sugar and Sweetener Dispute Facilitates Trade . . 31 Multilateral Liberalization Reaches Cotton, Textile, and Apparel Markets . . . . . 33 What’s Next? . . . . . . . . . . . . . 34 References . . . . . . . . . . . . . . . 37 Appendix . . . . . . . . . . . . . . . . 48

Acknowledgments

We acknowledge the critical feedback...