The effects of NAFTA expansion on US forest products exports.
When Mexico began liberalizing its domestic market and foreign trade a decade ago, the U.S. Government hoped U.S. exporters would gain easier access to the Nation's third most important foreign market, after Japan and Canada. Having just completed a free trade accord with Canada, U.S. trade officials sought to solidify changes in Mexico and encourage further economic reform by negotiating the North American Free Trade Agreement (NAFTA). Similar economic and political motivations are behind current U.S. Government interest in adding other countries to NAFTA or establishing an Americas-wide free trade area. Latin American leaders have themselves expressed a desire to create a regional free trade area by 2005.
If new countries join NAFTA or if hemispheric free trade is accomplished in another way, among the new signatories might be relatively large producers and consumers of forest products Ca prospect that should draw the attention of U.S. forest products manufacturers and consumers. Some have suggested that growth in the forest sectors of Latin American countries might raise competitive pressures on North American forest products producers. Others have simply indicated the region's potential for substantially increased forest products output.
No research, however, has been published on how NAFTA expansion to include other major forest products producers would affect competition. Given the current structure of trade in the Americas and the existing constraints to trade in forest products between the United States and the other countries, how would expansion of NAFTA change the situation?