U.S./MEXICAN BILATERAL HORTICULTURAL TRADE TRENDS UNDER NAFTA

• Horticultural products were among the U.S. agricultural export sectors that experienced the most growth in the run-up to and entering into force of NAFTA; similarly, horticultural products were among the sectors that suffered most in the wake of the December 1994 peso devaluation crisis.
• U.S. horticultural product exports continue to recover from the sharp dip in 1995; exports to Mexico in 1998 reached a record $596 million, up 9% from the previous record established in 1994.
• U.S. fresh produce exports, normally about one third of the total, are recovering more slowly; fresh fruit and vegetable exports were valued at $152 million in 1998, up 4% from 1997.
• Likewise, Mexican horticultural product exports to the United States continue to increase in 1998, which were 25% above shipments in 1997.
• While both U.S. and Mexican exports have risen substantially, the balance of horticultural trade between the two countries has continued to trend sharply in Mexico’s favor.

Figure 1:
U.S. HORTICULTURAL PRODUCT EXPORTS TO
MEXICO REACHED A RECORD $596 MILLION IN CALENDAR YEAR 1998

• This chart shows that after falling sharply in 1995, U.S. exports of horticultural products to Mexico have registered a strong recovery; U.S. exports of total horticultural products to Mexico reached a record $596 million in 1998, up 20% from shipments in 1997, and 9% above the 1994 previous record level.
• The processed fruit and vegetable group (valued at $327 million) registered the largest increase (up more than 30%), led by dried, frozen, and canned vegetables; tree nuts were valued at $28 million, up more than 20%; fresh fruits and vegetables were valued at $152 million, up 4%; shipments of wine (included in the "other horticultural" category) increased almost 9%.

Figure 2:
U.S. EXPORTS OF FRESH FRUITS AND VEGETABLES
TO MEXICO ARE SLOWLY RECOVERING

• Fresh fruits and vegetables normally account for about a third of total U.S. horticultural exports to Mexico, which also include processed products, nuts, and wine.
• This chart shows that in the three years coinciding with the run-up to NAFTA in January 1994 --a period during which Mexico began reducing phytosanitary barriers and restrictive licensing-- U.S. exports of fresh fruits and vegetables to Mexico increased sharply. This upward trend continued through NAFTA’s first full year, 1994, reaching a record of more than $200 million .
• After falling sharply in 1995 in the wake of the December 1994 peso devaluation, U.S. exports of fresh fruits and vegetables to Mexico registered a healthy recovery in 1996, and picked up speed in 1997.
• U.S. fresh fruit and vegetable exports to Mexico recovered slowly during 1998, mainly due to lower apples sales, the major fruit exported to Mexico; on the other hand, pear exports increased more than 50% in 1998 to reach a record $27 million; grape exports were valued at $22 million, up 2%.

Figure 3:
U.S. APPLE EXPORTS TO MEXICO

• Looking at the largest U.S. fresh produce export to Mexico, apples, shipments rose steadily from 1991 through 1994, while import licensing was removed and technical protocols were implemented.
• Apple shipments decreased sharply in 1995, again due mainly to the Mexican peso devaluation and related economic recession. Then, apple exports recovered slightly (4%) in 1996; U.S. apple exports to Mexico in 1997 were up only slightly.
• Apple shipments in the 1998 period were down almost 12% from 1997; U.S. shipments of Red and Golden Delicious apples were hampered in the early part of 1998 by Mexico’s punitive 101.1 percent antidumping duty.
• While that issue was settled in May, exports continue to lag from previous year levels, due to a minimum price provision that temporarily indirectly allowed Chilean apples to grab former U.S. market share.

Figure 4:
U.S. IMPORTS OF HORTICULTURAL PRODUCTS
FROM MEXICO CONTINUE STRONG

• This chart shows that U.S. imports of all horticultural products from Mexico continue their steady upward trend in 1998.
• U.S. imports of all horticultural products from Mexico were valued at more than $3 billion in 1998, up 25% from the same period the preceding year, boosted by imports of fresh fruits and vegetables.
• Nearly all U.S. horticultural product imports from Mexico are fresh produce.

Figure 5:
U.S. IMPORTS OF FRESH FRUITS & VEGETABLES
FROM MEXICO CONTINUED ITS UPWARD TREND

• Contrary to the situation for exports, the bulk of U.S. imports of fresh produce from Mexico is comprised of vegetables; Mexico also accounts for about 70% of total U.S. vegetable imports from all countries.
• This chart shows that in the period leading up to NAFTA and ever since, the much larger U.S. imports of fresh fruit and vegetables from Mexico have increased as well.
• The Mexican peso devaluation in 1994 and related economic recession contributed to a sharp increase in U.S. imports from Mexico in 1995 and 1996; imports of fresh produce from Mexico decreased 2% in 1997.
• Imports of fresh fruit and vegetables from Mexico in 1998 increased 25% from the same period last year.

Figure 6:
U.S. TOMATO IMPORTS FROM MEXICO

• Tomatoes are by far Mexico’s leading fresh horticultural product exported to the United States.
• The value of U.S. imports of Mexican tomatoes increased 10% in 1998.
• On October 28, 1996, the U.S. Department of Commerce and Mexican tomato growers signed a Suspension Agreement, eliminating the need to implement dumping duties. The Agreement provides that Mexican tomato growers will not sell their tomatoes at less than the reference price of $5.17 per 25 pound carton, or about $0.21 per pound.

Figure 7:
U.S. HORTICULTURAL PRODUCTS TRADE DEFICIT
WITH MEXICO CONTINUES TO EXPAND

• While both U.S. and Mexican horticultural product exports have risen substantially, the balance of horticultural trade between the two countries has continued to trend in Mexico’s favor, with a hefty assist from the peso devaluation that began in December 1994.
• This chart shows that the 1997 trade performance saw a stabilization of the U.S. deficit; however, the trade deficit expanded sharply in 1998.

Last modified: Tuesday, May 08, 2001