Agricultural Trade between the United States and Mexico: The Impacts of Mexico's Foreign Debt

Abstract

The potential for enhancing agricultural trade between the United States and Mexico is attested to by the large historic share of agricultural trade between the two countries. In 1988, Mexico was the second largest source of U.S. agricultural imports with $1.9 billion of commodities and the sixth largest recipient country of U.S. agricultural exports with commodities valued at $1.7 billion (table 1). Two related macroeconomic and international phenomena-Mexico's foreign debt burden and Mexico's apertura (literally opening) or liberalization of foreign trade policies-make this a particularly appropriate time for examining issues of agricultural trade between the United States and Mexico. Mexico's foreign and domestic debt clearly constrain the range and magnitude of policy options regarding agricultural development and trade. Yet, Mexico's recent proposals to liberalize trade (it agreed in 1986 to enter the GATT) may provide new opportunities for agricultural commodity and factor trade between the two countries. With one of the largest foreign debts of any Latin American country, two presidential administrations in Mexico have been saddled