News & Events | Independent Study Concludes NAFTA Benefited Mexican Industry, Consumers

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Independent Study Concludes NAFTA Benefited Mexican Industry, Consumers

U.S. beef and pork exporters are virtually unanimous in their conclusion that the North American Free Trade Agreement (NAFTA) has revolutionized exports to Mexico. After all, U.S. pork exports totaled 121,219 metric tons and U.S. beef exports totaled 117,721 metric tons in 1994, and in 2007 they totaled 276,388 metric tons and 359,452 metric tons respectively. But south of the border a chorus of critical voices has consistently claimed that post-NAFTA imports from the United States have ruined the Mexican cattle and hog industries. Now an economic study published by a leading private Mexican university, the Instituto Technologico Autonomo de Mexico (ITAM), in its Gaceta Economica Journal in December, concludes that NAFTA has been good for both consumers and industry in Mexico.

The study finds that the argument that imports from the United States adversely affect Mexico’s domestic market fails to consider that Mexican consumers are the winners since meat prices are down and consumption is up.

As for Mexican producers, it is false, the study concludes, that meat imports from the United States adversely affect them, since Mexico’s domestic production has increased and has been, on average, greater than before NAFTA’s implementation every year since 1996. Although marginal producers have struggled to meet increased competition, the more progressive domestic producers have responded to competition by reducing costs and becoming more efficient.

Mexican beef and pork production and exports have both increased under NAFTA. Annual beef production climbed from 1,197,724 metric tons on average before NAFTA (1988-1993) to 1,441,474 tons since the agreement was implemented (1994-2006).

The costs of the more efficient producers dropped, although the report doesn’t reflect the recent increase in corn prices, and beef exports have risen from 119,400 metric tons on average before NAFTA (1988-1993) to 130,605 metric tons afterwards.

Mexican pork production increased from 799,769 metric tons on average before NAFTA (1988-1993) to 1,004,403 metric tons since the agreement was implemented (1994-2006).

The growth in exports for Mexican pork is even more dramatic: 1,622 metric tons on average before NAFTA to 29,392 metric tons afterwards.

The study also refutes the notion that “most meat imports from the U.S. are low-quality meat, which is sold at low prices.” It points out that the beef and pork exported by the United States has to meet the same quality standards and USDA requirements as that produced for domestic consumption in the United States. The higher consumption of middle meats in the United States is a result of higher per capita income: the U.S. consumes more expensive cuts, but the Mexican market demands less expensive cuts from the same carcasses.

The study goes on to say that imports from the United States have improved the “flavor, tenderness and juiciness” of meat consumed in Mexico which now “has more palatable characteristics for the consumer, aside from having more marbling and white fat, which makes it more appealing.”