1. 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 Impacts of NAFTA and CUSTA on Agricultural Trade Flows Thomas L. Vollrath Economic Research Service USDA

2. Chart 1: Intra-NAFTA agricultural trade grew faster than NAFTA trade with the rest of the world NAFTA CUSTA

3. 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

4. Chart 2:The dominance of bulk exports has declined considerably since 1974-76

5. Chart 3: Mexico now exports more fresh produce and horticultural products than bulk commodities

6. Chart 4: U.S. processed food exports to Canada and Mexico & U.S. FDI in food manufacturing move in tandem CUSTA NAFTA

7. 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 CUACUA CUSTA

8. Chart 6: The U.S. captures a much larger share of the Mexican market than exporters in Mexico secure in the U.S. NAFTA

9. 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

10. 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 NAFTA CUSTA

11. Chart 9: The farm economies in all three NAFTA have undergone substantial structural change NAFTA CUSTA

12. Chart 10: NAFTA countries have developed or strengthened comparative advantages in HVPP post-CUSTA/NAFTA NAFTA CUSTA

13. Chart 11: The United States is a big winner exporting meats across the board NAFTA CUSTA

14. 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

15. Chart 12: Pre-NAFTA downward trends in U.S.-to-Mexico complementarities reversed themselves during 1994-98 NAFTA NAFANAFA

16. Chart 13: Increased complementarities characterize U.S.-Canadian trade post-CUSTA CUSTA

17. 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