Changing Agricultural Trade Patterns in North America
Changing Agricultural Trade Patterns in North America
AAEA-CAES WorkshopNorth American Free Trade Agreements:
Policy Challenges for 2002 Farm Bill and Beyond
Session I, August 8, 2001
The Impacts of NAFTA and CUSTA on Agricultural Trade Flows
Thomas L. Vollrath
Economic Research Service
USDA
Chart 1: Intra-NAFTA agricultural trade grew faster than NAFTA trade with the rest of the world
0
5
10
15
20
25
1974
1978
1982
1986
1990
1994
1998
Per
cen
t
0
5
10
15
20
25
Bil
lio
ns
of
real
U.S
. d
oll
ars
(198
9-91
ter
ms)
NAFTA to NAFTA trade
Intra-NAFTA exportshare
NAFTA
CUSTA
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
Chart 2:The dominance of bulk exports has declined
considerably since 1974-76
United States, 1974-76
Bulk71%
Intermediates17%
Produce5%
HVPP7%
United States, 1996-98
Bulk37%
Intermediates27%
Produce8%
HVPP28%
Chart 3: Mexico now exports more fresh produce and horticultural products than bulk commodities
Mexico, 1974-76
Bulk54%
Intermediates17%
Produce17%
HVPP12%
Mexico, 1996-98
Bulk16%
Intermediates12%
Produce37%
HVPP35%
Chart 4: U.S. processed food exports to Canada and Mexico & U.S. FDI in food manufacturing move in tandem
U.S. SIC-20 exports and FDI
0
1,000
2,000
3,000
4,000
5,000
6,000
1973
1978
1983
1988
1993
1998
Mil
lio
ns
of
U.S
. d
oll
ars
FDI in Mexico
FDI in Canada
Exports to Canada
Exports to Mexico
CUSTA
NAFTA
Chart 5: The U.S. is a more important market to Canada and Mexico than either of these countries are to the United States
Destination shares
0
10
20
30
40
50
60
70
80
90
1974
1978
1982
1986
1990
1994
1998
Pe
rce
nt Canada to U.S.
U.S. to Canada
Mexico to U.S.
U.S. to Mexico
NAFTA
CUSTA
Chart 6: The U.S. captures a much larger share of the Mexican market than exporters in Mexico secure in the U.S.
U.S.-Mexican agricultural trade shares
0
20
40
60
80
100
1974
1978
1982
1986
1990
1994
1998
Des
tinat
ion
shar
e
0
20
40
60
80
100
Mar
ket s
hare
DS: Mexico to U.S.
DS: U.S. to Mexico
MS: U.S. to Mexico
MS: Mexico to U.S.
NAFTA
Chart 7: The U.S. also captures a much larger share of the Canadian market than exporters in Canada achieve in the U.S.
U.S.-Canadian agricultural trade shares
0
10
20
30
40
50
60
1974
1978
1982
1986
1990
1994
1998
Des
tin
atio
n s
har
e
0
20
40
60
80
Mar
ket
shar
e DS: Canada to U.S.
DS: U.S. to Canada
MS: U.S. to Canada
MS: Canada to U.S.
CUSTA
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
Bilateral trade intensity
0
2
4
6
8
10
12
1974
1978
1982
1986
1990
1994
1998
IT in
de
x
Canada toU.S.
U.S. toCanada
Mexico toU.S.
U.S. toMexico
NAFTA
CUSTA
Chart 9: The farm economies in all three NAFTA have undergone substantial structural change
Revealed comparative advantages in selected primary commodities
01234567
1974
1977
1980
1983
1986
1989
1992
1995
1998
Bala
ssa's
in
dex
U.S. corn
Mex fruit
Cdn potatoes
threshold
NAFTA
CUSTA
Chart 10: NAFTA countries have developed or strengthened comparative advantages in HVPP post-CUSTA/NAFTA
Revealed comparative advantages in selected high-value processed products
0
0.5
1
1.5
2
1974
1977
1980
1983
1986
1989
1992
1995
1998
Bala
ssa's
in
dex
Cdn bakery products
Mex n-alchc bevrdgs
U.S. food preps
threshold
NAFTACUSTA
Chart 11: The United States is a big winner exporting meats across the board
U.S. revealed comparative advantages in meats
0
0.5
1
1.5
2
2.5
1974
1977
1980
1983
1986
1989
1992
1995
1998
Bala
ssa's
in
dex
U.S. beef
U.S. pork
U.S. poultry
U.S. other meat
threshold
NAFTA
CUSTA
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
Chart 12: Pre-NAFTA downward trends in U.S.-to-Mexico complementarities reversed themselves during 1994-98
Commodity complementarity, United States to Mexico
0
0.5
1
1.5
2
2.5
1974
1977
1980
1983
1986
1989
1992
1995
1998
CC
inde
x
field crops
HVP
Commodity complementarity, Mexico to United States
0
0.5
1
1.5
2
2.5
1974
1977
1980
1983
1986
1989
1992
1995
1998
CC
inde
x
field crops
HVP
NAFTA
NAFTA
Chart 13: Increased complementarities characterize U.S.-Canadian trade post-CUSTA
Commodity complementarity, United States to Canada
0
0.20.4
0.60.8
11.2
1.4
1974
1977
1980
1983
1986
1989
1992
1995
1998
CC
inde
x field crops
HVP
Commodity complementarity, Canada to United States
0
0.20.4
0.6
0.8
11.2
1.4
1974
1977
1980
1983
1986
1989
1992
1995
1998
CC
inde
x field crops
HVPCUSTA CUSTA
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