U.S.-Mexico Agricultural Trade Liberalization

GAO discussed recent developments in agricultural trade between the United States and Mexico and the views of U.S. agricultural industry groups regarding trade liberalization measures. GAO noted that: (1) Mexico's agricultural exports to the U.S. more than doubled between fiscal year (FY) 1980 and FY 1989 and U.S. and Mexican agricultural trade increased from $2.3 billion in 1982 to $5 billion in FY 1989; (2) Mexico's agricultural exports to the United States increased from $1 billion in FY 1980 to nearly $2.3 billion in FY 1989, while FY 1987 was the only year during that period that had a significant decline; (3) complementary or noncompeting commodities accounted for about 24 percent of the value of Mexican agricultural exports to the U.S., while there was a significant overlap in harvest and marketing seasons for other commodities; and (4) in FY 1985, Mexico required import licenses for 317 different agricultural commodities, but by FY 1990, only 57 agricultural commodities were subject to such licenses. GAO believes that: (1) Mexico's large external debt, import licensing requirements and strict health regulations, and U.S. and Mexican border processing procedures have limited Mexico's ability to promote agricultural development; and (2) as with other U.S. free trade agreements, the United States may have to contend with the problem of industry adjustment to changing competitive conditions by gradually phasing out tariffs.