Changing Agricultural Trade Patterns in North America Changing Agricultural Trade Patterns in North America AAEA-CAES Workshop North American Free Trade Agreements: Policy Challenges for 2002 Farm Bill and Beyond Session I, August 8, 2001 The

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Changing Agricultural Trade Patterns in North
America Changing Agricultural Trade Patterns
in North AmericaAAEA-CAES WorkshopNorth
American Free Trade Agreements Policy
Challenges for 2002 Farm Bill and BeyondSession
I, August 8, 2001 The Impacts of NAFTA and CUSTA
on Agricultural Trade Flows

• Thomas L. Vollrath
• Economic Research Service
• USDA

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Chart 1 Intra-NAFTA agricultural trade grew
faster than NAFTA trade with the rest of the world
NAFTA
CUSTA
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Total agriculture(USDA-defined) and the 4
subsectors

• Bulk commodities
• unmilled grain, oilseeds, raw fiber
• Processed intermediates
• flour, feed, vegetable oils, spun fiber, live
  animals
• Fresh produce horticultural products
• fruits, vegetables, nuts, flower, horticultural
  products
• High-value-processed products
• fresh frozen meats, pasta, breakfast cereals,
  wine, beer, food preparations

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Chart 2The dominance of bulk exports has
declined considerably since 1974-76
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Chart 3 Mexico now exports more fresh produce
and horticultural products than bulk commodities
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Chart 4 U.S. processed food exports to Canada
and Mexico U.S. FDI in food manufacturing move
in tandem
CUSTA
NAFTA
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Chart 5 The U.S. is a more important market to
Canada and Mexico than either of these countries
are to the United States
NAFTA
CUSTA
CUA
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Chart 6 The U.S. captures a much larger share of
the Mexican market than exporters in Mexico
secure in the U.S.
NAFTA
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Chart 7 The U.S. also captures a much larger
share of the Canadian market than exporters in
Canada achieve in the U.S.
CUSTA
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Chart 8 U.S. agricultural exports to Canada
(Mexico) were 3.6 (6.3) times greater than would
have been predicted in the absence of special
inducements and impediments
CUSTA
NAFTA
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Chart 9 The farm economies in all three NAFTA
have undergone substantial structural change
NAFTA
CUSTA
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Chart 10 NAFTA countries have developed or
strengthened comparative advantages in HVPP
post-CUSTA/NAFTA
CUSTA
NAFTA
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Chart 11 The United States is a big winner
exporting meats across the board
NAFTA
CUSTA
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Field crops and high-value products

• Field crops
• rice, wheat, corn, and other cereals
• soybeans, rapeseed, and other oilseeds
• cotton and other plant fiber
• fresh fruits, vegetables, and nuts
• legumes and tubers
• other crops
• High-value products (HVP)
• pasta, bakery products, and breakfast cereals
• meat and meat products
• processed fruits and vegetables
• beer, wine, soft drinks, distilled alcoholic
  beverages
• other food preparations

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Chart 12 Pre-NAFTA downward trends in
U.S.-to-Mexico complementarities reversed
themselves during 1994-98
NAFA
NAFTA
NAFTA
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Chart 13 Increased complementarities
characterize U.S.-Canadian trade post-CUSTA
CUSTA
CUSTA
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Summary of key findings

• Explosive growth in intra-NAFTA trade
• Changes in the composition of ag trade
• Changes in the geographical distribution of
  member-country trade
• Increased competitiveness within NAFTA
• Neighborly trade more important most
  everywhere, except for Mexican exporters
• Some evidence that structural changes are
  beneficial