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Celebrating NAFTA’s Five-Year Anniversary
It was five years ago, on Jan. 1, 1994, that implementation of the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico began.
Since then, we’ve often heard the question, "Where do you stand on NAFTA?" The treaty elicits a whole range of responses – positive, negative and mixed – from everyone from factory workers to corporate executives.
Those of us who work in the agricultural exporting community like to think that we can speak with one voice. After all, taken together, Canada and Mexico make up our largest market, accounting for nearly one-quarter of all U.S. agricultural, fish and forest product exports -- a total of nearly $67 billion in 1997.
Yet, so often when we sit down and compare our thoughts, we discover that we have different perspectives--the products of our varying areas of expertise, experience and knowledge.
One thing we all agree upon. Canada and Mexico are two completely different markets.
More than 70 percent of U.S. agricultural exports to Canada in 1997 were consumer-oriented products, while more than 40 percent of our sales to Mexico in 1997 were bulk commodities.
But while three times as many people lived in Mexico in 1997 than in Canada (95.4 million versus 30.3 million), Canadians and Mexicans spend about the same amount of money per year on food, $1,155 compared to $1,100, although the difference in per capita incomes is substantial: In Canada it’s $19,028, in Mexico $4,801.
This issue of AgExporter affords a special opportunity for the in-house experts at the Foreign Agricultural Service to "tell it like it is" from a range of unique perspectives.
From the man on the Mexican border, Todd Drennan, who describes the nuts and bolts of international trade, to Sam Rosa’s description of horticultural product trends, this issue is loaded with market-oriented information that can broaden your NAFTA knowledge. It runs the gamut from soy and grain to the snack foods and wine that wind up on store shelves throughout North America.
To briefly recap, NAFTA mandates the eventual elimination of all nontariff barriers to agricultural trade between the United States and Mexico. Many tariffs were eliminated immediately, while others are phased out over periods of five to 15 years. All agricultural provisions will be implemented by 2008. For import-sensitive industries, long transition periods and special safeguards will allow for an orderly adjustment to free trade with Mexico.
Our agreement with Canada is slightly more complicated because the U.S.-Canada Free Trade Agreement, which went into effect in 1989, was incorporated into NAFTA. Under these provisions, all tariffs affecting agricultural trade between the United States and Canada, with a few exceptions, were removed on Jan. 1, 1998. The exceptions are U.S. imports of dairy, poultry, eggs and margarine, which are covered by tariff-rate quotas.
Overall, I believe the five-year anniversary of NAFTA is something to celebrate. It was the first regional trade agreement ever signed by the United States. It has provided the United States with the impetus to develop more regional trade relationships, such as the Free Trade Area of the Americas and the Asia Pacific Economic Cooperation forum, while still pushing for global reform under the World Trade Organization. Finally, NAFTA has helped reinforce our strong belief that open markets, where all countries can compete fairly and freely, are the best markets for U.S. agricultural products.
Lon Hatamiya
Administrator, Foreign Agricultural Service
U.S. Department of Agriculture
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