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Trade Creation and Trade Diversion in the North American Free Trade Agreement: The Case of the Agricultural Sector

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Author Info

  • Susanto, Dwi
  • Rosson, C. Parr, III
  • Adcock, Flynn J.
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    Abstract

    This paper examines the effect of the U.S.-Mexico trade agreement under the North American Free Trade Agreement (NAFTA). The results suggest that U.S. agricultural imports from Mexico have been responsive to tariff rate reductions applied to Mexican products. A one percentage point decrease in tariff rates is associated with an increase in U.S. agricultural imports from Mexico by 5.31% in the first 6 years of NAFTA and by 2.62% in the last 6 years of NAFTA. U.S. imports from Mexico have also been attributable to the pre-NAFTA tariff rates. Overall, the results indicate that the U.S.-Mexico trade agreement under NAFTA has been trade creating rather than trade diverting.

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    File URL: http://purl.umn.edu/6618
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    Bibliographic Info

    Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

    Volume (Year): 39 (2007)
    Issue (Month): 01 (April)
    Pages:

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    Handle: RePEc:ags:joaaec:6618

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    Web page: http://www.saea.org/jaae/jaae.htm
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    Related research

    Keywords: agricultural sector; NAFTA; panel data; tariffs; trade creation; trade diversion; International Relations/Trade; F10; F15; Q17; Q18; C31; C33;

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    Cited by:
    1. Lota D. Tamini & Maurice Doyon & Rodrigue Simon, 2012. "Analyzing Trade Liberalization Effect in the Egg Sector Using a Dynamic Gravity Model," Cahiers de recherche CREATE 2012-6, CREATE.
    2. Tamini, Lota D. & Doyon, Maurice & Simon, Rodrigue, 2012. "Analyzing trade liberalization effect in egg sector using a dynamic gravity model," MPRA Paper 39315, University Library of Munich, Germany.
    3. Tamini, Lota Dabio & Doyon, Maurice & Simon, Rodrigue, 2012. "Analyzing Trade Liberalization Effect in the Egg Sector Using a Dynamic Gravity Model," Working Papers 125286, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).

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