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A Coherent Agriculture Trade Policy for Mexico

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  • Peters, Ralf
  • Vanzetti, David

Abstract

Mexico’s agricultural trade reform coincides with increasing imports, decreasing employment in agriculture and high poverty rates in rural areas. Imports have increased from all major trading partners and particularly from NAFTA members who supply more than 80 per cent of Mexico’s agricultural imports. NAFTA has been accused of damaging farmers in Mexico and jeopardizing Mexico’s food self-sufficiency. Although tariffs have been gradually reduced, many Mexican producers have expressed concern about the removal of tariff protection. In addition, although NAFTA specified the removal of bilateral tariffs on both sides of the border, there are no limitations in the agreement concerning the use of domestic support. The purpose of this study is to assess alternative policy options. A global general equilibrium model, GTAP, is used to analyze the production, trade and welfare effect of such policy changes. The results show that policies that increase distortions may strengthen the agricultural sector in terms of higher output, exports and employment but are likely to have adverse effects on the remaining economy. Removing payroll taxes and policies that increase agricultural productivity instead have positive effects for both the agricultural sector and the economy as a whole.

Suggested Citation

  • Peters, Ralf & Vanzetti, David, 2012. "A Coherent Agriculture Trade Policy for Mexico," Conference papers 332229, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332229
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    File URL: https://ageconsearch.umn.edu/record/332229/files/5923.pdf
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    References listed on IDEAS

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    1. Dimaranan, Betina V. & Hertel, Thomas W. & Keeney, Roman, 2003. "OECD Domestic Support and the Developing Countries," 2003 Annual meeting, July 27-30, Montreal, Canada 22000, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    3. Jotanovic, Aleksandar & Gilmour, Brad, 2009. "NAFTA: Outcomes, Challenges and Prospects," Economic and Market Information 55321, Agriculture and Agri-Food Canada.
    4. Dimaranan, Betina & Hertel, Thomas W. & Keeney, Roman, 2003. "OECD Domestic Support and the Developing Countries," GTAP Working Papers 1161, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    5. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    6. Julian M. Alston, 2010. "The Benefits from Agricultural Research and Development, Innovation, and Productivity Growth," OECD Food, Agriculture and Fisheries Papers 31, OECD Publishing.
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