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Trade diversion from tomato suspension agreements

Author

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  • Kathy Baylis
  • Jeffrey M. Perloff

Abstract

Trade barriers can cause output to be diverted to other countries and into other products. We study the effect of a voluntary price restraint (VPR) on Mexican tomatoes entering the United States. The diversion caused by the VPR is statistically and economically significant - representing over four-fifths of the direct effects of the trade barrier. When the VPR was binding, Mexico exported more tomatoes to Canada, the United States cut back on exports while Canada increased their exports to the United States. The VPR also diverted fresh tomatoes in Mexico into paste production, which was then exported to the United States.

Suggested Citation

  • Kathy Baylis & Jeffrey M. Perloff, 2010. "Trade diversion from tomato suspension agreements," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 127-151, February.
    • Handle: RePEc:cje:issued:v:43:y:2010:i:1:p:127-151
    DOI: 10.1111/j.1540-5982.2009.01566.x
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    Citations

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    Cited by:

    1. Pascal L. Ghazalian, 2015. "The New Tomato Suspension Agreement: What Are the Implications for Trade Flows?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(3), pages 359-380, September.
    2. Gabriel Felbermayr & Hendrik Mahlkow & Alexander Sandkamp, 2023. "Cutting through the value chain: the long-run effects of decoupling the East from the West," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(1), pages 75-108, February.
    3. Sandkamp, Alexander, 2020. "The trade effects of antidumping duties: Evidence from the 2004 EU enlargement," Journal of International Economics, Elsevier, vol. 123(C).
    4. Jung, Jione, 2009. "Effects Of The Suspension Agreement: U.S.-Mexico Fresh Tomatoes Antidumping Case," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49285, Agricultural and Applied Economics Association.
    5. Sébastien Jean & Kevin Lefebvre, 2024. "Beyond Target: Indirect Impacts of Antidumping," CESifo Working Paper Series 11212, CESifo.
    6. Valdez-Lafarga, Octavio & Schmitz, Troy, "undated". "A Country-Differentiated Import Demand Model for Fresh Tomatoes in the United States: an Estimation of Price and Income Elasticities for 1991 through 2014," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235807, Agricultural and Applied Economics Association.
    7. Naixi Liu & Yu Li & Mingzhe Jiang & Bangfan Liu, 2024. "Trade shocks and trade diversion due to epidemic diseases: Evidence from 110 countries," PLOS ONE, Public Library of Science, vol. 19(5), pages 1-20, May.
    8. Svetlana Ledyaeva, 2025. "Trade Diversion effects of China`s Vat Export Rebates," Open Economies Review, Springer, vol. 36(2), pages 541-575, April.
    9. Felbermayr, Gabriel & Sandkamp, Alexander, 2020. "The trade effects of anti-dumping duties: Firm-level evidence from China," European Economic Review, Elsevier, vol. 122(C).
    10. Perez, Maria P. & Ribera, Luis A. & Palma, Marco A., 2017. "Effects of trade and agricultural policies on the structure of the U.S. tomato industry," Food Policy, Elsevier, vol. 69(C), pages 123-134.
    11. Colin A. Carter & Tina L. Saitone & K. Aleks Schaefer, 2019. "Managed trade: The USMexico sugar suspension agreements," Canadian Journal of Economics, Canadian Economics Association, vol. 52(3), pages 1195-1222, August.
    12. Tibor Besedeš & Thomas J. Prusa, 2013. "Antidumping and the Death of Trade," NBER Working Papers 19555, National Bureau of Economic Research, Inc.
    13. Gustavo de Souza & Haishi Li, 2025. "The Employment Consequences of Anti-Dumping Tariffs: Lessons from Brazil," CESifo Working Paper Series 11654, CESifo.
    14. Schaefer, K. Aleks & Wolf, Christopher A., 2025. "Trade protection via tariff rate quota administration," Food Policy, Elsevier, vol. 131(C).
    15. Ashley Beeler & K. Aleks Schaefer & Jacob Sestak & Glenn Conover, 2024. "Impacts of U.S. countervailing duties on phosphate fertilizers," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 620-636, March.
    16. Tan Li & Wei Xiao, 2022. "US antidumping investigations and employment adjustment in Chinese manufacturing firms," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(1), pages 159-182, January.
    17. Kosse, Elijah & Devadoss, Stephen, 2016. "Welfare Analysis of the U.S.-Mexican Tomato Suspension Agreement," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252726, Southern Agricultural Economics Association.
    18. Tibor Besedeš & Thomas J. Prusa, 2017. "The Hazardous Effects Of Antidumping," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 9-30, January.
    19. Lawley, Chad, 2013. "Protectionism versus risk in screening for invasive species," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 438-451.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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