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Some Commodity Producers Don’t Share in NAFTA’s Benefits

PULLMAN, Wash. — Liberalized trade between the United States, Canada and Mexico under the North American Free Trade Agreement is producing positive benefits on a broad basis, but some Pacific Northwest farmers aren’t on the winning end of the deal, says a Washington State University economist.

Thomas Worley, a Washington State University extension economist, published his analysis in the 1999 Pacific Northwest Agricultural Situation and Outlook Report, released Wednesday (Dec. 30) by Washington State University, University of Idaho and Oregon State University economists.

Agricultural provisions of NAFTA aim to eliminate all tariffs, quotas and license restrictions on agricultural trade between the U.S. and Mexico over a 15 year implementation period. Restrictions on about half of all U.S. agricultural exports to Mexico were eliminated immediately upon NAFTA implementation. Numerous other restrictions are being eliminated over 10 years and agricultural trade is to be completely liberalized by 2008.

Since 1993, the year before NAFTA went into effect, U.S. agricultural trade with Mexico and Canada has increased 28 percent, rising from $16 billion to almost $26 billion. The figures combine imports and exports.

Studies show that only part of that increase can be attributed to NAFTA. Other economic factors and the weather also contribute to the increases.

Worley said regions where cross-border trade has flourished as a result of NAFTA liberalizations have faced increased competition. In the Pacific Northwest, this includes producers of potatoes, durum wheat and cattle.

Northwest apple growers also are displeased that some apple exports to Canada and all apple exports to Mexico are now subject to minimum prices that limit sales of an over abundant crop of U.S. apples.

“Such protectionist measures are viewed by U.S. producers to be in direct opposition to the spirit of the original NAFTA objective of open and competitive cross border trade,” Worley said.

“Benefits of international trade are realized in an aggregate sense, although specific producer groups may be winners or losers as a result of a more competitive international marketplace.” Worley said many of the most contentious issues attributed to NAFTA involve increased competition in regional markets which straddle the U.S. – Canada border.

“These glaring exceptions to the overall positive outcome thus far into the agreement are an unavoidable consequence of making trade more competitive,” Worley said.

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