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Trade diversion from tomato suspension agreements

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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. Des barrières commerciales peuvent entraîner la diversion de l'output vers d'autres pays ou d'autres productions. On étudie la diversion causée par les accords de restriction volontaire des prix (ARVP) des tomates mexicaines entrant sur le marché américain. La diversion causée par les ARVP a été statistiquement et économiquement significative – représentant plus des quatre cinquièmes des effets directs de la barrière tarifaire. Quand les ARVP ont été contraignants, le Mexique a exporté plus de tomates au Canada, les États‐Unis ont réduit leurs exportations alors que le Canada augmentait ses exportations vers les États‐Unis. Les ARVP ont aussi entraîné une diversion des tomates fraîches au Mexique vers la production de purée de tomate, un produit qui a alors été exporté vers les États‐Unis.

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  • Kathy Baylis & Jeffrey M. Perloff, 2010. "Trade diversion from tomato suspension agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(1), pages 127-151, February.
    • Handle: RePEc:wly:canjec:v:43:y:2010:i:1:p:127-151
    DOI: 10.1111/j.1540-5982.2009.01566.x
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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. 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.
    4. 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.
    5. Tibor Besedeš & Thomas J. Prusa, 2013. "Antidumping and the Death of Trade," NBER Working Papers 19555, National Bureau of Economic Research, Inc.
    6. Colin A. Carter & Tina L. Saitone & K. Aleks Schaefer, 2019. "Managed trade: The US–Mexico sugar suspension agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(3), pages 1195-1222, August.
    7. 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.
    8. Lawley, Chad, 2013. "Protectionism versus risk in screening for invasive species," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 438-451.
    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. Sandkamp, Alexander, 2020. "The trade effects of antidumping duties: Evidence from the 2004 EU enlargement," Journal of International Economics, Elsevier, vol. 123(C).
    11. Valdez-Lafarga, Octavio & Schmitz, Troy, 2016. "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.
    12. 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.
    13. 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.
    14. Tibor Besedeš & Thomas J. Prusa, 2017. "The Hazardous Effects Of Antidumping," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 9-30, January.

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    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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