Flynn J. Adcock

Trade Creation and Trade Diversion in the North American Free Trade Agreement: The Case of the Agricultural Sector

This paper examines the impact of the U.S.-Mexico trade agreement under NAFTA. The results suggest that U.S. agricultural imports from Mexico have been responsive to tariff rate reductions applied to Mexican products. A 1 percent decrease in tariff rates is associated with an increase in U.S. agricultural imports from Mexico by 3.96 percent in the first six years of NAFTA and by 1.07 percent in the last six years of NAFTA. US imports from Mexico have also been attributable to the pre-NAFTA tariff rates. Overall, the results indicate that the U.S.-Mexico trade agreement under NAFTA has been trade creating rather than trade diverting.

Immigration policy, foreign agricultural labor, and exit intentions in the United States dairy industry

United States agriculture is dependent on foreign labor. Current US immigration policies have been alleged to disrupt agricultural labor availability, particularly that of hired foreign labor. A national survey of dairy farmers across herd sizes and regions of the United States was conducted and the results were used to estimate the extent to which hired foreign labor dependency will affect exit intentions in dairy farming. This study found that the expected probability of exit from dairy farming increased as the use of hired foreign labor intensified. But the expected probability of exit also decreased rapidly as herd sizes got larger. Given the immigration policy currently in place, farmers expecting labor shortages in the future are expected to experience greater tendency to exit the industry.