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The Impact of NAFTA on Agricultural Commodity Trade: A Partial Equilibrium Analysis

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  • Naanwaab, Cephas B.
  • Yeboah, Osei-Agyeman

Abstract

This paper examines the effects of the North American Free Trade Agreement on agricultural commodity trade using extensive data. The data cover agricultural exports and imports between the U.S. and NAFTA partners over the extended period of 1989-2010. The commodities covered in our analyses include; corn, soy bean, cotton, wheat, fresh vegetables, poultry, dairy products, and red meats. Since the signing of the agreement, U.S. total agricultural commodity trade with NAFTA members has increased three-fold from $18 billion in 1994 to $61 billion in 2010. A partial equilibrium model, in which we derive each trading partner's excess demand and excess supply, is used to study the impact of NAFTA on trade, controlling for other trade-inducing variables such as exchange rates, tariffs, per capita incomes, and relative prices. Regression results show mixed effects of NAFTA on different commodities while graphical and counterfactual analyses indicate strictly positive effects.

Suggested Citation

  • Naanwaab, Cephas B. & Yeboah, Osei-Agyeman, 2012. "The Impact of NAFTA on Agricultural Commodity Trade: A Partial Equilibrium Analysis," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119730, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea12:119730
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    File URL: http://purl.umn.edu/119730
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    References listed on IDEAS

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    1. Khan, Mohsm S. & Ross, Knud Z., 1977. "The functional form of the aggregate import demand equation," Journal of International Economics, Elsevier, vol. 7(2), pages 149-160, May.
    2. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    4. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.
    5. Agama, Laurie-Ann & McDaniel, Christine A., 2002. "The NAFTA Preference and U.S.-Mexico Trade," Working Papers 15873, United States International Trade Commission, Office of Economics.
    6. Hillberry, Russell H. & McDaniel, Christine A., 2002. "A Decomposition of North American Trade Growth since NAFTA," Working Papers 15866, United States International Trade Commission, Office of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    NAFTA; Agricultural commodities; trade; partial equilibrium analysis; Agribusiness; Agricultural and Food Policy; Crop Production/Industries; International Relations/Trade; Marketing;

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