Studies of US-Mexico vegetable trade have generally emphasized the importan
ce of US tariffs in determining the competitive advantage of US producers.
Even so, research has identified at least four factors related primarily to
the different levels of economic development in the US and Mexico that als
o have important effects on US-Mexico agricultural trade in general and fre
sh vegetable trade in particular. These include the differential growth rat
es of US and Mexican real wages, production technology (yields), and per ca
pita income as well as cyclical movements in the real Mexican Peso/US Dolla
r exchange rate. This study examines the relative contribution of NAFTA and
the development-related factors to likely future changes in US fresh veget
able imports from Mexico. The analysis employs an econometric simulation mo
del of US and Mexican markets for five fresh vegetables (tomatoes, cucumber
s, squash, bell peppers, and onions) accounting for 80% of US fresh vegetab
le imports. The results suggest that the 1994-1995 Peso devaluation rather
than NAFTA was primarily responsible for the sharp increase in US imports o
f Mexican vegetables observed in the first years following the implementati
on of NAFTA. Over time, however, the results suggest that differences in th
e growth rates of US and Mexican production yields and, to a lesser extent,
of US and Mexican real incomes and/or real wage rates could plausibly cont
ribute more to the future growth of US tomato, squash, and onion imports fr
om Mexico than the trade liberalizing effects of NAFTA. (C) 2001 Elsevier S
cience B.V. All rights reserved.