NAFTA Spurs Trade Both Ways, Says Report

August 27, 1999

A new USDA report says the North American Free Trade Agreement (NAFTA) has helped expand trade with Canada and Mexico. Entering its sixth year, the agreement's influence on U.S. Agriculture "is more apparent than ever."

During 1994-98, U.S. agricultural exports to Canada and Mexico expanded at an annual rate of 8.1%. Exports to the rest of the world increased 2.6% a year. Agricultural imports from Canada and Mexico increased an average of 11.1% a year during the period, and imports from the rest of the world increased 6.7%.

Since NAFTA was implemented, U.S. agricultural exports to Canada and Mexico have increased from $9 billion in 1993 to $13.2 billion in 1998; corresponding imports have increased from $7.4 billion to $12.5 billion.

Among livestock products, the agreement has "greatly benefitted" beef and pork commerce, the report says, while "exerting a moderate influence on hog and poultry trade." The exemption of Canadian beef from the U.S. meat import law has been more influential than NAFTA on U.S.-Canadian cattle trade, but NAFTA tariff changes have increased U.S. cattle exports to Mexico an estimated 15-25%.

U.S. corn exports to Mexico are somewhat more due to NAFTA than they would have been otherwise. At the same time, NAFTA limited the reduction of U.S. sorghum exports to Mexico during 1995-97 when many Mexican livestock producers switched from sorghum to corn feed.

NAFTA's tariff reductions have increased U.S. wheat imports from Canada above what would have occurred without the pact, but U.S. wheat exports to Canada in the form of grains have been insignificant despite these reductions.