THE IMPACTS OF NAFTA ON US AND CANADIAN FOREST PRODUCT EXPORTS TO MEXICO

The North American Free Trade Agreement (NAFTA) will lower barriers to trade and investment across the continent. This paper presents predic tions of the effects of NAFTA on Mexico's imports of intermediate wood products, scrap and waste paper, pulp, and newsprint from the United States and Canada. Predictions were made with a partial equilibrium mo del. Model development involved estimating (i) elasticities of Mexico' s import demand with respect to price and demand shifters and (ii) ela sticities of prices with respect to their determinants, and then predi cting, with these elasticities; the impacts of NAFTA on imports and pr ices. The effects of NAFTA on the exogenous variables affecting import demand and prices were summarized for three scenarios, based on the p redictions of broader studies of the agreement. The results suggest th at the full long-term impact of the NAFTA would be to increase the val ue of all Mexican imports from the United States and Canada by 21 to 8 5%. The effect would vary greatly by product and country of origin. Me xican imports of particleboard, hardwood veneer, scrap and waste paper , and wood pulp would be the least affected, mainly because of their s maller tariffs and inelastic price responses. Imports of Douglas-fir ( Pseudotsuga menziesii (Mirb.) Franco) lumber, hardwood lumber, softwoo d plywood, and newsprint from the United States would increase the mos t under NAFTA.