April 1998

Cover: 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 exports continue to recover from the sharp dip in 1995, as seen in 1996 and now strongly evident in 1997; exports in 1997 were 23% more than in 1996 and only 9% short of their 1994 peak
• U.S. fresh produce exports, about one third of the total, are recovering more slowly. In 1997, sales of U.S. apples, the largest single fruit export, were up only slightly; a huge antidumping duty imposed by Mexico in September 1997 slowed shipments. U.S. grape sales, on the other hand, registered a strong recovery with shipments up 100%
• While overall Mexican horticultural product exports to the United States increased again in 1997, the fresh fruits and vegetables component, which accounts for more than 60% of the total, suffered a small setback, due to lower tomato sales
• 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, with a hefty assist from the peso devaluation

Figure 1: U.S. HORTICULTURAL PRODUCT EXPORTS TO MEXICO REBOUNDING

• This chart shows U.S. exports of all horticultural products to Mexico continued to recover solidly in 1997. Shipments were valued at $495.6 million
• While a definite improvement, the 1997 value remained down 9% from the record set in 1994, before the peso devaluation of December of that year, when they reached a peak of about $550 million
• Nevertheless, shipments in 1997 continued to recover and marked the second best year for U.S. horticultural exports to Mexico, after 1994. The processed fruit and vegetable group (valued at $136.7 million) registered the largest increase (up almost 40%), led by dried, frozen, and canned vegetables. Fresh fruits and vegetables were valued at $146.4 million, up 28%
• On the other hand, shipments of wine decreased 17% from 1996; the punitive tariffs imposed by Mexico in 1997 on U.S. wine have slowed the recent growth in wine trade

Figure 2: U.S. EXPORTS OF FRESH FRUITS AND VEGETABLES TO MEXICO CONTINUE TO RECOVER

• Fresh fruits and vegetables 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. Total U.S. exports of fresh horticultural products to Mexico in 1997 were valued at $146.4 million, up 28% from the preceding year
• While a definite improvement, this 1997 total remained 30% below that posted in 1994; apples, pears, and table grapes comprised more than 50% of U.S. fresh horticultural exports to Mexico; U.S. tomato sales registered a sharp increase in 1997
• While U.S. fresh fruit and vegetable exports still have considerable ground to make up to get back to the trend before the peso devaluation, the outlook is for a sustained, gradual expansion in U.S. fresh fruit and vegetable exports to Mexico

Figure 3: U.S. HORTICULTURAL PRODUCT IMPORTS FROM MEXICO GENERALLY UP

• This chart shows U.S. imports of all horticultural products from Mexico continued their steady upward march in 1997
• U.S. imports of all horticultural products from Mexico were valued at $2.7 billion in 1997, up 8% from the preceding year, led by commodities such as beers (up 37%) and cut flowers and nursery products (up 23%)
• However, imports of fresh fruits and vegetables, which account for more than 60% of total U.S. horticultural product imports from Mexico, were down 2% in 1997, due primarily to reduced tomato imports

Figure 4: U.S. IMPORTS OF FRESH FRUITS & VEGETABLES FROM MEXICO FLATTENING

• Nearly all of the $1.7 billion in horticultural product imports from Mexico are fresh produce. In turn, fresh vegetables account for 70% of total fresh imports. (Mexico also accounts for more than 70% of total U.S. vegetable imports from all countries)
• This chart shows that in the period leading up 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 fruit and vegetables from Mexico decreased 2% in 1997, however, due primarily to lower prices for Mexican tomatoes; tomatoes account for a third of the value of U.S. fresh horticultural product imports from Mexico

Figure 5: 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 exports to Mexico were hampered by a huge antidumping duty imposed on U.S. Red and Golden Delicious apples
• A resolution to the dumping case and continued MAP-funded market development and promotion activities will be critical in helping U.S. apple sales to rebound in the Mexican market

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 decreased 11% in 1997
• 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
• The import volume of tomatoes from Mexico also registered a decrease (4%) in 1997 and prices averaged $0.36 per pound, well above the reference price stated in the Agreement

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
• The 1997 trade performance, however, saw a stabilization of the U.S. deficit
• As noted above, lower tomato imports from Mexico and higher overall U.S. horticultural exports to Mexico, were the major factors

Last modified: Tuesday, May 08, 2001