The effects of NAFTA and an FTAA on U.S. exports of hardwood forest products
The North American Free Trade Agreement (NAFTA) took effect on January 1, 1994, beginning what might result in a restructuring of trade in the hemisphere, especially between the United States and Mexico. This restructuring and expected welfare gains are intended outcomes of the kind of freer trade among countries that has been sweeping the hemisphere for at least ten years. An ultimate outcome of hemispheric economic liberalization might be a regional free trade accord-a Free Trade Area of the Americas (FTAA). NAFTA and this possible descendant may affect forest products trade and the forest products sectors of some of these countries (Prestemon and Buongiomo 1996; Prestemon 1997). Significantly, much change will occur for exports of United States hardwood products.
It is important that hardwood product manufacturers in the United States understand the importance of Latin America relative to other trading partners and the possible effects of regional trade liberalization on United States trade in these and competing products. More information on the expected effects of NAFTA and a proposed FTAA will help current and potential future exporters to the region and investors in the region make better trade and investment decisions. In the following pages, we place Latin America in context with regard to forest products trade, particularly for hardwood solidwood products, and we report some predictions of the effects of NAFTA and an FTAA relevant to hardwood products manufacturers of the United States. We begin by describing the genesis of NAFTA and other regional accords, proceed to summarize current trade in key forest products among North American countries, and finish by providing some predictions and recommendations about opportunities for United States hardwood producers.