Mexican farmers against U.S. imports: an update.

• Author: Kornis, Magdolna

A December 2003 World Bank report (2) concluded that the North American Free Trade Agreement (NAFTA) had a positive impact on Mexican agriculture-a conclusion reached by some other analysts, including Mexican ones. Yet, the Mexican Government continues to erect barriers against agricultural imports to appease farmers, who blame NAFTA for widespread rural poverty.

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For quite some time, issues of agricultural trade have dominated U.S.-Mexican trade relations. (3) During the first decade of the North American Free Trade Agreement (NAFTA), tariffs in mutual trade have been gradually reduced for agricultural products, as they have for products of other sectors. All tariffs, including those on most agricultural products, were eliminated on January 1, 2003. (4) Angered by the disappearance of tariff protection, and by the U.S. farm bill (5) signed into law in May 2002, which granted new subsidies to U.S. farmers, Mexican growers and ranchers have been pressuring their government to renegotiate the agricultural portion of NAFTA. Mexico also emerged as a major actor in the worldwide debate about the agricultural exports of rich countries and their adverse impact on the exports of poorer countries.

Although Mexican farmers benefit from government subsidies, they argue that they have been devastated by competition from imports from the United States because they consider U.S. farmers to enjoy greater subsidies than they do. The Mexican farmers' perception of NAFTA's negative effect on Mexican agriculture has been quickly adopted by other anti-NAFTA groups, causing an estimated 32 percent of the Mexican public to share this anti-NAFTA belief. (6)

Several analysts however, some in Mexico, disagree with this view. These detractors argue that NAFTA is not to blame for the country's widespread rural poverty, which has other deep-seated historical causes-most significantly small farm size, and a tenuous land ownership system (both known generally as characteristics of Mexico's ejido system). (7) These analysts further cite statistics, which show that Mexican agricultural production and trade has actually benefitted from NAFTA, as has agricultural production and trade of the other partners-the United States and Canada. (8) Notably, the World Bank's December 2003 report says:

"Our main conclusion is that liberalization of agricultural trade under NAFTA has already been substantial. However, this liberalization has not had the devastating effects on Mexican agriculture as a whole and has not had the negative effects on poor subsistence farmers in particular." (9)

The report states that, overall, NAFTA had a positive impact on Mexican agriculture for three principal reasons: (1) growth of demand allowed Mexican agricultural production and imports to rise simultaneously during the NAFTA years of the 1990s; (2) land-productivity of Mexican farm lands increased in some segments of farming, and (3) the effectiveness of Mexican agricultural subsidies and income supports also increased in some segments of farming, due to the reforms implemented during the NAFTA years. (10)

Some other analysts contend that subsistence farmers dedicated to traditional crops-including corn, barley, and beans-did experience disruptions during the NAFTA period, but these resulted largely from the failure of Mexican institutions and individuals to make the necessary adjustments over the transition period provided by NAFTA. (11)

Yet, the strong and sometimes violent protests of Mexican farmers and their allies attacking NAFTA, and the persistent widespread poverty of rural communities in the country forced the Government of Mexico to respond positively to the farmers' demands. Although rejecting the call for renegotiating NAFTA, the Mexican Government accelerated instituting an array of measures designed to protect domestic agriculture, including a sometimes questionable use of antidumping measures, sometimes inconsistent enforcement of sanitary and phytosanitary standards, and irregular compliance with customs procedures. During 2003, significant quantities of imports from the United States had been rejected by the Mexican Secretariat of Agriculture at the border. (12)

Early in 2003, the government amended Mexico's foreign trade law, which now contains modifications of the country's antidumping and countervailing duty laws. (13) Still other measures that have the effect of restricting agricultural imports are under consideration. In addition to stepped-up trade protection, the government provided new subsidies to Mexican farmers and...