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Trade Creation and Trade Diversion in the North American Free Trade Agreement: The Case of ... - page 14 / 17

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AAEA Meeting 2006

14

Interpretations of Parameter Estimates: Table 2

NAFTA Dummy significant: significant evidence that US imports from ROW increased during NAFTA period (20.1%).

A 1% reduction in tariff rates against ROW          1.5% increase in US imports from ROW; nearly 1/4 the effects of tariff reductions against Mexico      Suggests that US gives more preference to Mexican Agricultural Products

Tariff Rates against Mexico: +  but not significant        there is no significant evidence that NAFTA has caused trade diversion in agricultural sector.

Prices and GDP are highly significant: predominant factors that likely determine US imports from ROW

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