Free Trade, Corn, and the Environment: Environmental Impacts of US - Mexico Corn Trade Under NAFTA

Abstract

The North American Free Trade Agreement (NAFTA) had a profound impact on corn trade between the United States and Mexico. Negotiated tariff reductions and the Mexican government's decision not to charge some tariffs to which it was entitled resulted in a doubling of US corn exports to Mexico. This paper examines the environmental implications of this change on both sides of the border. For the US, increased exports to Mexico due to trade liberalization represent one percent of total US production and should therefore be considered responsible for one percent of the environmental impacts of corn production. These are considerable, including: high chemical use; water pollution due to runoff; unsustainable water use for irrigation; the expansion of genetically modified corn; soil erosion; and biodiversity loss. Trends in these areas are presented. For Mexico, the principal potential environmental impact of the loss of a significant share of its domestic corn market to the US is the threat to agro-biodiversity. Preliminary evidence is presented on the extent to which imports and declining prices are reducing the production of native corn varieties. The authors conclude that shifting corn trade under NAFTA is having significant negative environmental effects on both sides of the border and could have even more profound impacts in the future if it results in the loss of significant agro-biodiversity in Mexico.