U.S. However, despite the progress  made, some U.S. agricultural products continue to experience difficulties  gaining access to the Mexican market, typically due to antidumping, SPS  requirements, safeguards, and other trade measures Mexico has put in  place. These difficulties are not unlike challenges U.S. agricultural exports  face in other major markets, such as Canada or Japan. U.S. Agricultural Trade with Mexico Has Continued to Increase since NAFTA

Since NAFTA’s implementation, total U.S. agricultural exports to Mexico  have nearly doubled, rising from $4.1 billion in 1993—the last year prior to  NAFTA’s implementation—to $7.9 billion in 2003 (adjusted for inflation). According to USDA,  the nontariff measures that present the most significant barriers to market  access for U.S. agricultural exports have been Mexico’s application of  antidumping duties, SPS requirements, and safeguards. Mexico Enacted Various Agricultural Programs in Response to Trade Liberalization, but Structural Problems Impair Growth and Challenge NAFTA Implementation

Since the early 1990s, the Mexican government has enacted several  agricultural assistance programs to help farmers adjust to the changes  brought by trade liberalization, including NAFTA. They oppose  further tariff eliminations as called for under NAFTA and demand a  renegotiation of the agricultural provisions of the agreement. This  opposition presents challenges to Mexico’s successful transition to  liberalized agricultural trade under NAFTA. Elimination of these tariffs provided U.S. agricultural exports even greater  access to the Mexican market. Nevertheless, since 2001 the United States has supported  collaborative efforts to promote economic development in the parts of  Mexico where growth has lagged under the Partnership for Prosperity  (P4P) initiative. Recognizing the importance of rural development to the  successful implementation of NAFTA, State Department and USDA  strategies for Mexico call for building on collaborative activities under P4P  to pursue the related goals of rural development and trade liberalization  under NAFTA; however, the P4P action plans do not set forth specific  strategies and activities that could be used to achieve these goals. The lack of specific plans under P4P to pursue rural development in  support of NAFTA is particularly noteworthy because USDA officials  expressed concerns that Mexico’s lagging rural development presents a  challenge to the successful transition to liberalized trade under NAFTA,  including the elimination of remaining tariffs in 2008. This document also  acknowledges the need to continue to underscore the benefits of free trade  for Mexico under NAFTA while seeking ways to help Mexico address its  rural development issues. In addition, our report covered  a number of areas including collaborative activities of U.S. agencies in  Mexico and concerns about the long-term success of NAFTA, as well as  Mexican trade measures that impact U.S. agricultural exports to Mexico. 3). GAO Comments

1. 2.
Why GAO Did This Study

In 1994, the North American Free Trade Agreement (NAFTA) created the world's largest free trade area and, among other things, reduced or eliminated barriers for U.S. agricultural exports to Mexico's vast and growing markets. As part of a body of GAO work on NAFTA issues, this report (1) identifies progress made and difficulties encountered in gaining market access for U.S. agricultural exports to Mexico; (2) describes Mexico's response to changes brought by agricultural trade liberalization and challenges to the successful implementation of NAFTA; and (3) examines collaborative activities and assesses strategies to support Mexico's transition to liberalized agricultural trade under NAFTA.

What GAO Found

U.S. agricultural exports have made progress in gaining greater access to Mexico's market as Mexico has phased out barriers to most U.S. agricultural products, and only a handful of tariffs remain to be eliminated in 2008. Total U.S. agricultural exports to Mexico grew from $4.1 billion in 1993 to $7.9 billion in 2003. Despite progress, some commodities still have difficulties gaining access to the Mexican market. GAO found that Mexico's use of antidumping, plant and animal health requirements, safeguards and other nontariff trade barriers, such as consumption taxes, presented the most significant market access issues for U.S. agricultural exports to Mexico. Mexico has put in place several programs to help farmers adjust to trade liberalization, but structural problems, such as lack of rural credit, continue to impede growth in rural areas, presenting challenges to full implementation of NAFTA. Lagging rural development fuels arguments that NAFTA has hurt small farmers, although studies, including some Mexican studies, do not support this conclusion. Opponents of NAFTA want to block further tariff eliminations and are demanding renegotiation of NAFTA's agricultural provisions. Concerned about such opposition, U.S. officials acknowledged the need to promote the benefits of NAFTA, while seeking ways to help Mexico address its rural development issues. Historically, U.S. agencies have undertaken many agriculture-related collaborative efforts with Mexico. Since 2001, U.S.-Mexico development activities have taken place under the Partnership for Prosperity (P4P) Initiative to promote development in parts of Mexico where economic growth has lagged. Recognizing the importance of rural development to the success of NAFTA, Department of State and USDA strategies for Mexico call for building on collaborative activities under the P4P to pursue the related goals of rural development and trade liberalization under NAFTA; however, the P4P action plans do not set forth specific strategies and activities that could be used to achieve these goals.