U.S. Report Says North America Moving Toward Single Trade Market
Washington File Staff Writer
Washington - U.S. agricultural trade with Mexico and Canada is on a "clear upward trend," resulting in the economies of the three countries "behaving as if they form one market," reports the U.S. Department of Agriculture (USDA).
In a June 1 report, the USDA said trade liberalization under the North American Free Trade Agreement (NAFTA) - which encompasses the United States, Canada and Mexico - is one factor behind the growing market integration of the three countries.
Another contributing factor, said the USDA, is that government and private sector "decision-makers" in the three countries have pursued "greater institutional and policy coordination." In addition, structural changes within agriculture also have helped integration, as have continued population growth and sustained periods of economic expansion in the region. These trends, said the USDA, have boosted consumer demand and forced new economic arrangements in the agricultural and processed-food industries.
The USDA said that, in general, integration with the United States is more pronounced for Canada than it is for Mexico, due to Mexico's lower per capita income and the fact that U.S.-Canada economic relations have been relatively close for a longer period than those between the United States and Mexico.
The USDA said that since NAFTA's enactment in 1994, U.S. exports to Mexic o and Canada - and Canada's exports to the United States - have all more than doubled. U.S. and Canadian markets were already well integrated before 1994 but, over the past decade, the grain and oilseed markets of Mexico and the United States have achieved a level of integration that is starting to approach the level between Canada and the United States.
The three NAFTA countries are among 34 democracies in the Western Hemisphere that are negotiating a Free Trade Area of the Americas, and each of the three countries has completed or is negotiating free-trade agreements with countries outside NAFTA, said the USDA. The three countries now have a free-trade agreement with Chile, an outcome that the USDA said is similar to what would have resulted had Chile formally joined NAFTA. The NAFTA countries also are seeking meaningful agricultural trade reforms through multilateral negotiations at the World Trade Organization.
The report also examined the effects of the Security and Prosperity Partnership of North America, announced by the leaders of the NAFTA countries in March. The USDA said that through this initiative, the governments of North America have made a commitment to an "even more ambitious agenda of regulatory coordination, featuring common approaches to food safety, greater coordination and information-sharing among testing laboratories, and increased cooperation with respect to the regulation of agricultural biotechnologies."
The USDA said that achieving the objectives of the North American security partnership will require a "high degree of cooperation and coordination among the three governments." The USDA added that the partnership is "likely to serve as a model for similar endeavors in the future."
The full text of the report is available on the USDA Web site.