Mixed Bag on NAFTA's Benefits

April 20, 2001

John Skorburg, senior economist, economic analysis, American Farm Bureau Federation, says the North American Free Trade Agreement has been "good" for the United States, Canada and Mexico, but "results differ by category and commodity." His analysis was made on the heels of a release by USDA's Foreign Agricultural Service of country and commodity data for 2000. The data is broken down into three agricultural categories for both imports and exports; bulk, intermediate and consumer oriented goods.

U.S. agricultural exports to North America, including Canada and Mexico, increased from $10.1 billion in 1994 to $14.2 billion by 2000, a gain of 39.9%. Corn exports led the bulk commodities in value and increased 50.6%.. Live animals led the intermediate category in value, increasing 28.5%. Red meats topped the consumer sector with an increase of 40.4%.

Imports to the United States from North America also increased, 67.7%, from $8.2 billion to $13.7 billion over the period. The top categories included wheat (bulk), live animals (intermediate) and vegetables (consumer). "Thus, it is not a surprise that two of our biggest disputes over the horizon have evolved around wheat trade with Canada and vegetables (tomatoes) with Mexico," said Skorburg.

The United States continues to run a NAFTA agricultural trade surplus measured in 2000 at $457 million. This surplus includes a positive balance of $1.5 billion with Mexico and a deficit of $500 million with Canada, according to Skorburg.

In overall value, regardless of category, the top five U.S. exports to North America in 2000 (excluding snack foods) were: red meats ($1.2 billion), corn ($1.1 billion), fresh vegetables ($937 million), fresh fruit ($859 million) and soybeans ($750 million). The bulk commodities sent a higher dollar value to Mexico, while the fruits and vegetables (consumer oriented) were stronger to Canada.

By 2000, Skorburg adds, total U.S. agricultural exports to Canada had increased to $7.6 billion from $5.6 billion in 1994 – a gain of 37.6%. Consumer oriented farm products made up 72% of the total, intermediate products21% and bulk commodities the final 7%. Fresh fruits and vegetables led the consumer sector.

Based on dollar value in 2000, the top five U.S. agricultural exports to Canada were fresh vegetables ($869 million), fresh fruit ($639 million), snack foods ($617 million), processed fruit and vegetables ($434 million) and fresh and frozen red meats ($349 million). The top five U.S. agricultural imports from Canada were red meats ($1.6 billion), live animals ($1.1 billion), snack foods ($1.1 billion), processed fruit and vegetables ($552 million) and fresh vegetables ($412 million).

By 2000, total agricultural exports to Mexico had increased to $6.5 billion, from $4.6 billion in 1994 – a gain of 42.6%. Consumer oriented goods made up 41% of the total, intermediate products 20% and bulk commodities a healthy 39%. Both corn and soybeans posted impressive exports figures for 2000. The top six U.S. agricultural exports to Mexico, based on dollar value in 2000, were corn ($973 million), red meats ($876 million), soybeans ($678 million), cotton ($476 million), processed fruit/vegetables ($260) and poultry meat ($250 million).

The top five U.S. agricultural imports from Mexico were fresh vegetables ($1.4 billion), wine and beer ($757 million), other fresh fruit ($578 million), processed fruit and vegetables ($400 million) and live animals ($407 million). Imports of fresh vegetables from Mexico have increased by 60% since 1994. This has caused some friction with U.S. regions that compete with Mexican growers, Skorburg notes.

"NAFTA continues to be a significant market for both U.S. agricultural exports and imports, with (import/export) trade approaching $28 billion in 2000," he added. Consumer oriented agricultural products are most important in trade between the United States and Canada, making up 65-72% of two-way Canada-U.S. agricultural trade.