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Impacts of NAFTA and CUSTA on Agricultural Trade Flows: A Northern Great Plains Perspective

Impacts of NAFTA and CUSTA on Agricultural Trade Flows: A Northern Great Plains Perspective. Won W. Koo Professor and Director Center for Agricultural Policy and Trade Studies North Dakota State University. Purpose.

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Impacts of NAFTA and CUSTA on Agricultural Trade Flows: A Northern Great Plains Perspective

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  1. Impacts of NAFTA and CUSTA on Agricultural Trade Flows: A Northern Great Plains Perspective Won W. Koo Professor and Director Center for Agricultural Policy and Trade Studies North Dakota State University

  2. Purpose • To evaluate changes in agricultural trade flows between the United States and Canada under CUSTA and impacts on Northern Plains agriculture

  3. Changes in trade flows of agricultural commodities and products under CUSTA • HRS wheat • durum wheat • malting barley • feed barley • Live cattle and hog • beef and pork • processed products

  4. Table 1. U.S. Trade Flows to and from Canada, Grain

  5. Table 2. U.S. Trade Flows to and from Canada, Livestock

  6. Factors affecting trade flows • Lower transportation costs relative to other major markets • Continuous appreciation of the U.S. dollar against the Canadian dollar • Quality of wheat and malting barely • Export enhancement program • Elimination of Canadian Rail subsidies under WGTA

  7. Empirical Model • CX= f(USDP, CDP, EXR, OTHX) • USDP=g(CX, DCS, OTHP)

  8. Effect of Canadian Exports on Price

  9. Conclusion (1) • CUSTA has had a significant influence on trade flow of agricultural goods, mainly Canadian exports to the United States.

  10. Conclusion (2) • Trade flows of livestock and livestock products are influenced by exchange rate between the two countries and price differences, while those of wheat and barley are influenced by not only exchange rate and price differences, but also quality of U.S. grain, the EEP, and Canadian rail subsidies.

  11. Conclusion (3) • Canadian exports of grain and livestock to the U.S. have negatively affected U.S. price of grain and livestock, but the price effects are not significant for all agricultural goods except wheat and pork.

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