With the beginning of 2008, agricultural trade between Mexico and the United States became completely duty-free with the end of the implementation period of the North American Free-Trade Agreement. All U.S. products will now be able to enter Mexico without any duties. The same will occur with Mexico’s exports to the United States.
According to Ken Hobbie, U.S. Grains Council president and chief executive officer, NAFTA’s agricultural agreement promotes the total liberalization of agriculture and forestry in the region and is one of the most successful trade agreements in U.S. history.
NAFTA was enacted in 1994 with all duties phasing out period during a 15-year period. With NAFTA's full implementation, the last remaining trade restrictions on a handful of agricultural commodities such as U.S. exports of corn and high fructose corn syrup to Mexico, and Mexican exports of sugar and certain horticultural products to the United States are now removed.
“This agreement is undoubtedly a huge success for U.S. farmers, but also for livestock and poultry producers in Mexico,” says Hobbie. “Specifically, this agreement is responsible for dramatically increasing agricultural trade between the United States and Mexico,” adding that USGC worked with end-users of feed grains and trade associations in Mexico during the entire phase-in period to ensure completion and smooth transition to a free-market.
According to USDA’s Foreign Agricultural Service, since the agreement’s implementation, FAS recorded that two-way agricultural trade between the United States and Mexico has risen from $5.9 billion to $24 billion. Since 2005, the United States has invested nearly $20 million in programs and technical exchanges to assist Mexico in addressing production, distribution and marketing-related challenges associated with the transition to free and open trade, according to a statement from Acting USDA Secretary Chuck Conner.
Julio Hernandez, USGC acting director in Mexico, says despite contrary reports, there is no crisis in Mexico stemming from NAFTA’s full implementation. In fact, Hernandez says corn farmers in Mexico are getting the best price in history for their products. Also, NAFTA has eased a looming crisis regarding corn availability, which significantly increased tortilla prices in the last year for Mexican consumers.
“We are now getting all the corn we need, which is leveling the price of food and feed for Mexican farmers and consumers,” Hernandez says.
According to Hobbie, liberalized trade has been a long-time goal of USGC and there are several additional examples of steps in that direction.
“NAFTA is essential to expanding trade opportunities for U.S. feed grain exports to Mexico. Since NAFTA, Congress has approved CAFTA (Central American Free Trade Agreement), Chile, Peru and many others. Trade pacts with Colombia and Panama are awaiting approval. If passed, the U.S. ultimately will have broadened market access for U.S. feed grains to more than two-thirds of the population in the Western Hemisphere. U.S. feed grains producers win in a free-trade environment.”
Source: U.S. Grains Council