Trade Creation and Trade Diversion in the North American Free Trade Agreement: The Case of the Agricultural Sector

This paper examines the effect of the U.S.-Mexico trade agreement under the North American Free Trade Agreement (NAFTA). The results suggest that U.S. agricultural imports from Mexico have been responsive to tariff rate reductions applied to Mexican products. A one percentage point decrease in tariff rates is associated with an increase in U.S. agricultural imports from Mexico by 5.31% in the first 6 years of NAFTA and by 2.62% in the last 6 years of NAFTA. U.S. imports from Mexico have also been attributable to the pre-NAFTA tariff rates. Overall, the results indicate that the U.S.-Mexico trade agreement under NAFTA has been trade creating rather than trade diverting.


Issue Date:
2007-04
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/6618
Published in:
Journal of Agricultural and Applied Economics, Volume 39, Number 1
Page range:
121-134
Total Pages:
14
JEL Codes:
F10; F15; Q17; Q18; C31; C33




 Record created 2017-04-01, last modified 2017-04-28

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