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Agricultural Dumping Under NAFTA: Estimating the Costs of U.S. Agricultural Policies to Mexican Producers

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  • Timothy A. Wise
Abstract
With the opening of the Mexican economy under the North American Free Trade Agreement (NAFTA), Mexican agriculture came under new competitive pressures from U.S. exports. It was widely recognized at the beginning of NAFTA that Mexico had geographically-based comparative advantages in supplying off-season fruits and vegetables to a hungry U.S. market. NAFTA’s liberalization of agricultural trade produced the expected results, with more staple crops and meats flowing south and more seasonal fruits and vegetables flowing north. In agriculture, tariffs and quotas have now mostly been eliminated. Not so agricultural subsidies, which were left largely undisciplined by NAFTA. High U.S. farm subsidies for exported crops, which compete with Mexican products, have prompted charges that the level playing field NAFTA was supposed to create is in fact tilted heavily in favor of the United States. This paper assesses the costs of U.S. agricultural policies to Mexican producers by examining the extent to which the United States exported agricultural products to Mexico at prices below their costs of production, one of the definitions of “dumping†in the WTO. We study eight agricultural goods – corn, soybeans, wheat, rice, cotton, beef, pork, and poultry – all of which are heavily supported by the U.S. government, were produced in Mexico in significant volumes before NAFTA, and experienced dramatic increases in U.S. exports to Mexico after the agreement. We look at the years 1997-2005 because the beginning year follows both the implementation of NAFTA and the enactment of the 1996 U.S. Farm Bill, which significantly changed the nature of U.S. farm support. We estimate “dumping margins†and the costs to Mexican producers of prices driven below production costs by U.S. policies. We estimate Mexican losses for the eight products at $12.8 billion over the nine-year period, more than the value of Mexican tomato exports to the United States. Corn farmers experienced the greatest losses: $6.6 billion, an average of $99 per hectare per year.

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  • Timothy A. Wise, "undated". "Agricultural Dumping Under NAFTA: Estimating the Costs of U.S. Agricultural Policies to Mexican Producers," GDAE Working Papers 09-08, GDAE, Tufts University.
    • Handle: RePEc:dae:daepap:09-08
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    References listed on IDEAS

    as
    1. Timothy A. Wise, "undated". "Understanding the Farm Problem: Six Common Errors in Presenting Farm Statistics," GDAE Working Papers 05-02, GDAE, Tufts University.
    2. Jonathan M. Harris & Neva R. Goodwin, "undated". "Reconciling Growth and Environment," GDAE Working Papers 03-03, GDAE, Tufts University.
    3. Jonathan M. Harris, "undated". "Macroeconomic Policy and Sustainability," GDAE Working Papers 01-09, GDAE, Tufts University.
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    5. David Dapice, "undated". "Current Economic Conditions in Myanmar and Options for Sustainable Growth," GDAE Working Papers 03-04, GDAE, Tufts University.
    6. Neva R. Goodwin, "undated". "Five Kinds of Capital: Useful Concepts for Sustainable Development," GDAE Working Papers 03-07, GDAE, Tufts University.
    7. Elanor Starmer & Aimee Witteman & Timothy A. Wise, "undated". "Feeding the Factory Farm: Implicit Subsidies to the Broiler Chicken Industry," GDAE Working Papers 06-03, GDAE, Tufts University.
    8. Timothy A. Wise, "undated". "The Paradox of Agricultural Subsidies: Measurement Issues, Agricultural Dumping, and Policy Reform," GDAE Working Papers 04-02, GDAE, Tufts University.
    9. Timothy A. Wise, "undated". "Policy Space for Mexican Maize:Protecting Agro-biodiversity by Promoting Rural Livelihoods," GDAE Working Papers 07-01, GDAE, Tufts University.
    10. Frank Ackerman & Timothy A. Wise & Kevin P. Gallagher & Luke Ney & Regina Flores, "undated". "Free Trade, Corn, and the Environment: Environmental Impacts of US – Mexico Corn Trade Under NAFTA," GDAE Working Papers 03-06, GDAE, Tufts University.
    11. Gallagher, Kevin P. & Aguayo, Francisco, 2003. "Economic Reform, Energy, and Development: The Case of Mexican Manufacturing," Working Papers 15575, Tufts University, Global Development and Environment Institute.
    12. Aguayo, Francisco & Gallagher, Kevin P., 2005. "Economic reform, energy, and development: the case of Mexican manufacturing," Energy Policy, Elsevier, vol. 33(7), pages 829-837, May.
    13. Dapice, David, 2003. "Current Economic Conditions in Myanmar and Options for Sustainable Growth," Working Papers 15582, Tufts University, Global Development and Environment Institute.
    14. Goodwin, Neva R., 2003. "Macroeconomics for the 21st Century," Working Papers 15581, Tufts University, Global Development and Environment Institute.
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    Cited by:

    1. González, Humberto & Macías, Alejandro, 2017. "Agrifood Vulnerability and Neoliberal Economic Policies in Mexico," Review of Agrarian Studies, Foundation for Agrarian Studies, vol. 7(1), July.
    2. Cruzatti C., John, 2021. "Free Trade Agreements and Development: a Global Analysis with Local Data," Working Papers 0702, University of Heidelberg, Department of Economics.
    3. Julie A. Nelson, 2012. "Poisoning the Well, or How Economic Theory Damages Moral Imagination," GDAE Working Papers 12-07, GDAE, Tufts University.
    4. Julie A. Nelson, 2012. "Are Women Really More Risk-Averse than Men?," GDAE Working Papers 12-05, GDAE, Tufts University.
    5. Timothy A. Wise, 2012. "The Cost to Mexico of U.S. Corn Ethanol Expansion," GDAE Working Papers 12-01, GDAE, Tufts University.
    6. Harris, Jonathan M., 2013. "Green Keynesianism: Beyond Standard Growth Paradigms," Working Papers 179111, Tufts University, Global Development and Environment Institute.
    7. Christiane Kuptsch, 2015. "Inequalities and the impact of labour market institutions on migrant workers," Chapters, in: Janine Berg (ed.), Labour Markets, Institutions and Inequality, chapter 13, pages 340-360, Edward Elgar Publishing.
    8. Julie A. Nelson, 2011. "Would Women Leaders Have Prevented the Global Financial Crisis? Implications for Teaching about Gender, Behavior, and Economics," GDAE Working Papers 11-03, GDAE, Tufts University.
    9. Nelson, Julie A., 2012. "Poisoning the Well, or How Economic Theory Damages Moral Imagination," Working Papers 179107, Tufts University, Global Development and Environment Institute.
    10. John Ikerd, 2016. "Family farms of North America," Working Papers 152, International Policy Centre for Inclusive Growth.
    11. David Cleveland & Allison Carruth & Daniella Mazaroli, 2015. "Operationalizing local food: goals, actions, and indicators for alternative food systems," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 32(2), pages 281-297, June.
    12. Fernández, Antonio Turrent & Wise, Timothy A. & Garvey, Elise, 2012. "Achieving Mexico’s Maize Potential," Working Papers 179101, Tufts University, Global Development and Environment Institute.
    13. Puyana, Alicia, 2012. "Mexican Agriculture and NAFTA: A 20-Year Balance Sheet," Review of Agrarian Studies, Foundation for Agrarian Studies, vol. 2(1), July.
    14. Antonio Turrent Fernández & Timothy A. Wise & Elise Garvey, 2012. "Achieving Mexico’s Maize Potential," GDAE Working Papers 12-03, GDAE, Tufts University.
    15. John Cruzatti C., 2019. "Free Trade Agreements and Local Economic Development: a Global Analysis with High-Resolution Data," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2019-04-ccr, Condorcet Center for political Economy.

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