The environmental costs of agricultural trade liberalisation: Mexico-U.S. maize trade under NAFTA

This paper examines the environmental implications of tripling US maize exports to Mexico, following massive tariff reductions under the North American Free Trade Agreement (NAFTA). It examines the environmental implications of this change on both sides of the border, and in the case of Mexico also contributes new data on the links between NAFTA, poverty, migration, and genetic diversity.The paper points out that theoretical models predict that rising trade and declining restrictions on the movement of capital and goods between an industrialised and a developing country will lead pollution-intensive companies to relocate production to areas in which regulations and/or enforcement of environmental laws are more lax. According to the findings of the paper, those predictions can be conformed:more sustainable agricultural practices in Mexico, most notably the preservation of maize genetic diversity but also less chemical-intensive production, are threatened by competition from more environmentally damaging production methods in the United StatesMexico’s low-yield, traditional maize farmers go uncompensated for their long-term stewardship of genetic diversity in this important world food cropUS producers do not have to internalise the environmental costs of their chemical-intensive industrial farmingthere is a possibility of contamination of traditional fields in Mexico with Bt transgenes from grains imported from the USmarket failures in one area (negative externalities in the US) interact with market failures in another (positive externalities in Mexico) to create a net environmental impact that is greater than the sum of its parts.The study concludes that maize diversity is a common global good worth preserving, and if the market is unlikely to internalise these benefits any time soon, then non-market mechanisms will be needed to shelter such sectors in the economic integration process.