a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Finance, U.S. Senate

March 2005 INTERNATIONAL 

TRADE

U.S. Agencies Need 

Greater Focus to 

Support Mexico’s 

Successful Transition 

to Liberalized 

Agricultural Trade 

under NAFTA

GAO-05-272
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-272.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4128 or yagerl@gao.gov. 

Highlights of GAO-05-272, a report to the 

Chairman, Committee on Finance, U.S. 

Senate 

March 2005

INTERNATIONAL TRADE 

U.S. Agencies Need Greater Focus to 

Support Mexico’s Successful Transition 

to Liberalized Agricultural Trade under 

NAFTA 

U.S. agricultural exports have made progress in gaining greater access to 

Mexico’s market as Mexico has phased out barriers to most U.S. agricultural 

products, and only a handful of tariffs remain to be eliminated in 2008. Total 

U.S. agricultural exports to Mexico grew from $4.1 billion in 1993 to $7.9 

billion in 2003. Despite progress, some commodities still have difficulties 

gaining access to the Mexican market. GAO found that Mexico’s use of 

antidumping, plant and animal health requirements, safeguards and other 

nontariff trade barriers, such as consumption taxes, presented the most 

significant market access issues for U.S. agricultural exports to Mexico. 

Mexico has put in place several programs to help farmers adjust to trade 

liberalization, but structural problems, such as lack of rural credit, continue 

to impede growth in rural areas, presenting challenges to full 

implementation of NAFTA. Lagging rural development fuels arguments that 

NAFTA has hurt small farmers, although studies, including some Mexican 

studies, do not support this conclusion. Opponents of NAFTA want to block 

further tariff eliminations and are demanding renegotiation of NAFTA’s 

agricultural provisions. Concerned about such opposition, U.S. officials 

acknowledged the need to promote the benefits of NAFTA, while seeking 

ways to help Mexico address its rural development issues. 

Historically, U.S. agencies have undertaken many agriculture-related 

collaborative efforts with Mexico. Since 2001, U.S.–Mexico development 

activities have taken place under the Partnership for Prosperity (P4P) 

Initiative to promote development in parts of Mexico where economic 

growth has lagged. Recognizing the importance of rural development to the 

success of NAFTA, Department of State and USDA strategies for Mexico call 

for building on collaborative activities under the P4P to pursue the related 

goals of rural development and trade liberalization under NAFTA; however, 

the P4P action plans do not set forth specific strategies and activities that 

could be used to achieve these goals. 

Total Value of U.S.–Mexico Agricultural Trade, 1989–2003 

0

2

4

6

8

10

2003 constant dollars in billions

U.S. agricultural imports from Mexico U.S. agricultural exports to Mexico

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

In 1994, the North American Free 

Trade Agreement (NAFTA) created 

the world’s largest free trade area 

and, among other things, reduced 

or eliminated barriers for U.S. 

agricultural exports to Mexico’s 

vast and growing markets. As part 

of a body of GAO work on NAFTA 

issues, this report (1) identifies 

progress made and difficulties 

encountered in gaining market 

access for U.S. agricultural exports 

to Mexico; (2) describes Mexico’s 

response to changes brought by 

agricultural trade liberalization and 

challenges to the successful 

implementation of NAFTA; and (3) 

examines collaborative activities 

and assesses strategies to support 

Mexico’s transition to liberalized 

agricultural trade under NAFTA. 

What GAO Recommends

To aid the successful implementation of NAFTA, GAO recommends that the U.S. Department of 

State, in cooperation with the U.S. 

Department of Agriculture (USDA) 

and other relevant agencies, 

develop an action plan under the 

Partnership for Prosperity Initiative 

laying out specific collaborative 

efforts on rural development that 

would support Mexico’s transition 

to liberalized trade under NAFTA. 

GAO also recommends that the 

Department of State and other 

relevant agencies use the Initiative 

to expand collaboration with 

Mexico to facilitate credit 

availability in rural Mexico. U.S. 

agencies generally agreed with our 

recommendations. 
Page i GAO-05-272 International Trade

Contents

Letter 1

Results in Brief 2

Background 4

U.S. Agricultural Exports Have Gained Greater Access to Mexico 

under NAFTA, but Some Market Access Barriers Remain 9

Mexico Enacted Various Agricultural Programs in Response to 

Trade Liberalization, but Structural Problems Impair Growth and 

Challenge NAFTA Implementation 21

U.S. Agencies Undertake Collaborative Agricultural Efforts, but Do 

Not Focus on Rural Development Challenges to Mexico’s 

Transition to Liberalized Trade 24

Conclusions 30

Recommendation for Executive Action 31

Agency Comments and Our Response 32

Appendixes

Appendix I: Objective, Scope, and Methodology 36

Appendix II: Case Studies of Selected U.S. Agricultural Exports to 

Mexico 39

Appendix III: Three Major Mexican Agricultural Programs 57

Appendix IV: U.S.–Mexico Collaborative Activities Benefit Agricultural 

Trade (1994–2004) 62

Appendix V: Recent U.S.–Mexico Collaborative Agricultural Activities 

under Partnership for Prosperity 85

Appendix VI: Comments from the U.S. Department of State 88

GAO Comments 93

Appendix VII: Comments from the U.S. Department of Agriculture 94

Appendix VIII: GAO Contacts and Staff Acknowledgments 96

GAO Contacts 96

Acknowledgments 96

Tables Table 1: Conventional NAFTA Tariff Reduction Schedules 5

Table 2: Examples of SPS Controversies between the United States 

and Mexico 18

Table 3: Animal and Plant Health Inspection Service (APHIS) 

Assistance and/or Collaborative Activities in Mexico, 

1994–2004 62
Contents

Page ii GAO-05-272 International Trade

Table 4: USDA Economic Research Service (ERS), Collaborative 

Activities with Mexico, 1994–2004 64

Table 5: USDA Agricultural Research Service, Collaborative 

Activities with Mexico, 1994–2004 67

Table 6: USDA Foreign Agricultural Service, International 

Cooperation and Development (ICD), Collaborative 

Activities with Mexico, 1994–2004 72

Table 7: USDA Agricultural Marketing Service (AMS), 

Collaborative Activities with Mexico, 1994–2004 79

Table 8: USDA National Agricultural Statistics Service (NASS), 

Collaborative Activities with Mexico, 1994–2004 81

Table 9: USDA Food Safety and Inspection Service (FSIS), 

Collaborative Activities with Mexico, 1994–2004 82

Figures Figure 1: Total Value of U.S.–Mexico Agricultural Trade, 

1989–2003 13

Figure 2: Figure 2: U.S. Agricultural Exports to Mexico by Largest 

Product Groups, 1994–2003 15

Figure 3: Total Volume of U.S. Fresh Apple Exports to Mexico, 

1989–2003 39

Figure 4: Total Volume of U.S. Beef Exports to Mexico, 

1989–2003 41

Figure 5: Total Volume of U.S. Corn Exports to Mexico, 

1989–2003 44

Figure 6: Total Volume of U.S. Fructose Syrup Exports to Mexico, 

1989–2003 47

Figure 7: Total Volume of U.S. Pork Exports to Mexico, 

1989–2003 49

Figure 8: Total Volume of U.S. Poultry Meat Exports to Mexico, 

1989–2003 51

Figure 9: Total Volume of U.S. Rice Exports to Mexico, 

1989–2003 54

Abbreviations

Alianza Alliance for the Countryside (Alianza para el Campo)

AMS Agricultural Marketing Service 

APHIS Animal and Plant Health Inspection Service

ARS Agricultural Research Service

BSE bovine spongiform encephalopathy

CFP Cochran Fellowship Program
Contents

Page iii GAO-05-272 International Trade

CIMMYT International Maize and Wheat Improvement Center (Centro 

Internacional de Mejoramiento de Maíz y Trigo)

ERS Economic Research Service

FAO United Nation’s Food and Agriculture Organization

FAS Foreign Agricultural Service

FATUS Foreign Agricultural Trade of the United States

FDA Food and Drug Administration

FMD foot and mouth diseases

FSI Food Safety Initiative

FSIS Food Safety and Inspection Service

GATT General Agreement on Tariffs and Trade

HFCS high-fructose corn syrup

NAFTA North America Free Trade Agreement

NASS National Agricultural Statistics Service

OPIC Overseas Private Investment Corporation

PROCAMPO Program of Direct Support for the Countryside (Programa de 

Apoyos Directos al Campo) 

P4P Partnership for Prosperity

SAGARPA Mexican Ministry of Agriculture (Secretaría de Agricultura, 

Ganadería, Desarrollo Rural, Pesca y Alimentación)

SCRP Scientific Cooperation Research Program

SE Mexican Ministry of the Economy (Secretaría de Economía) 

SENASICA Mexican National Service for Agriculture and Food Health, 

Wholesomeness and Quality (Sevicio Nacional de Sanidad, 

Inocuidad y Calidad Agroalimentaria)

SIAP Mexican Agricultural and Fisheries Statistics Service 

(Servicio de Información y Estadística Agroalimentaria y 

Pesquera)

SPS sanitary and phytosanitary 

SRE Mexican Ministry of Foreign Affairs (Secretaría de Relaciones 

Exteriores)

TCB trade capacity building

TRQ tariff rate quota

USAID Unites States Agency of International Development

USDA United States Department of Agriculture

USTR United States Trade Representative

WTO World Trade Organization
Page 1 GAO-05-272 International Trade

United States Government Accountability Office

Washington, D.C. 20548

A

March 25, 2005 Letr

The Honorable Charles E. Grassley

Chairman

Committee on Finance

United States Senate

Dear Mr. Chairman: 

In 1994, the North American Free Trade Agreement (NAFTA) created the 

world’s largest free trade area and helped Mexico become one of the largest 

and fastest growing markets for U.S. agricultural products. U.S. agricultural 

trade officials consider NAFTA a model for U.S. efforts to liberalize free 

trade throughout the Western Hemisphere. NAFTA is an ambitious 

undertaking, bringing together the United States and Canada, two of the 

most competitive and advanced agricultural producing nations, and 

Mexico, a developing country with a large rural population still 

significantly dependent on traditional agricultural production methods. 

Since the beginning of the negotiations, concern over these disparities has 

provoked controversy in Mexico regarding the agricultural provisions of 

NAFTA, and the debate continues over the benefits of the agreement for 

Mexico’s rural areas. This debate has significant implications for the full 

and successful implementation of NAFTA and long-term prospects for U.S. 

agricultural products in Mexico.

In response to your request for information on U.S.–Mexico agricultural 

trade and NAFTA, this report (1) identifies progress made, as well as 

difficulties encountered, in gaining market access for U.S. agricultural 

exports to Mexico since NAFTA went into effect; (2) describes both 

Mexico’s efforts in response to changes brought by agricultural trade 

liberalization and challenges to the successful implementation of NAFTA; 

and (3) examines U.S.–Mexico collaborative activities and assesses 

strategies to support Mexico’s transition to liberalized agricultural trade 

under NAFTA.

To address these objectives, we obtained and analyzed official data on 

agricultural trade trends from both U.S. and Mexican government agencies. 

We discussed the limitations and reliability of this trade data with U.S. 

Department of Agriculture (USDA) officials and determined that the trade 

data reported by USDA are sufficiently reliable for the purpose of this 

report. We conducted an extensive literature search and identified the most 

appropriate research and studies on Mexico’s agricultural programs and on 
Page 2 GAO-05-272 International Trade

the impact of NAFTA on Mexican agriculture. We took several steps to 

ensure the credibility of those studies we used for our report. We also met 

with U.S. and Mexican government officials in Washington, D.C., and in 

Mexico City. We contacted representatives of U.S. producer groups, 

academia, and other experts on U.S.–Mexico agricultural trade and 

Mexican agricultural sector development issues, and we reviewed 

extensive documentation and academic research provided by these 

sources. We also prepared case study analyses for seven agricultural 

commodities to illustrate the type of market access problems confronting 

U.S. agricultural exports to Mexico. While we describe Mexico’s use of 

trade measures, we did not evaluate the validity of their application. The 

commodities we selected for the cases studies were representative of 

products at various stages of the tariff elimination, different agricultural 

sectors (e.g., grains, horticultural, and animal products), various trade 

barriers, a range of dispute resolution mechanisms, and varying levels of 

export value and volume. We performed our work from February 2004 

through February 2005 in accordance with generally accepted government 

auditing standards. Appendix I contains a full description of our objectives, 

scope, and methodology.

Results in Brief Since NAFTA went into effect in 1994, U.S. agricultural exports have gained 

greater access to Mexico’s market. Mexico has phased out tariffs on all but 

a few agricultural imports from the United States and has ended its system 

of import licensing requirements—a key nontariff barrier. NAFTA also 

provided U.S. producers with additional recourse for resolving trade 

disputes. As implementation of NAFTA has progressed over the past 

decade, U.S. agricultural exports to Mexico have continued to demonstrate 

rapid growth, rising from $4.1 billion in 1993 to $7.9 billion in 2003. Yet 

some commodities still experience difficulties gaining access to the 

Mexican market. We found that Mexico’s use of antidumping actions, 

sanitary and phytosanitary requirements, safeguards, and a tax on 

beverages containing sweeteners other than sugar present the most 

significant market access problems for U.S. agricultural exports. For 

example, Mexico has applied special agricultural safeguard provisions on 

imports of U.S. live swine, pork, potato products, and fresh apples, while 

plant or animal health requirements have been applied to red meats, apples, 

and dry beans.

Beginning in the early 1990s, Mexican authorities instituted several 

programs to help farmers adjust to trade liberalization, including NAFTA, 

but structural problems like tenuous land ownership and lack of rural 
Page 3 GAO-05-272 International Trade

credit have impeded growth in rural areas, which presents challenges to 

the success of NAFTA. Mexican agricultural programs have targeted a 

range of farmers and objectives from income support to improved 

productivity. Yet critics note that Mexico still needs to address structural 

impediments to rural development. Lagging rural development has fueled 

arguments that NAFTA has hurt small farmers, although trade liberalization 

has not adversely affected Mexican agriculture as a whole. Opponents of 

NAFTA want to block further tariff eliminations and insist on a 

renegotiation of the agricultural provisions of the agreement. Both U.S. and 

Mexican officials warned about considerable opposition to the next round 

of tariff eliminations in 2008. One of the three remaining commodities 

scheduled to have tariffs lifted in 2008 is corn, which is particularly 

sensitive because it is the principal crop of small farmers. U.S. officials 

have acknowledged the need to promote the benefits of NAFTA, while 

seeking additional ways to help Mexico address its rural development 

issues.

Historically, U.S. agencies have collaborated with Mexico in support of 

mutual agricultural interests, but these activities have not been intended to 

address the challenges presented by lagging rural development to Mexico’s 

transition to liberalized trade under NAFTA. Although the United States has 

provided technical assistance to recent free trade partners to facilitate their 

adjustment to trade liberalization, no such assistance was arranged for 

Mexico when the agreement was concluded. More recently, since 2001 the 

United States has supported collaborative bilateral efforts under a highlevel bilateral initiative, the Partnership for Prosperity (P4P), to promote 

economic development in the parts of Mexico where economic growth has 

lagged. Officials from both countries are working on a broader approach to 

Mexican rural development under the initiative, but they recognize that 

much still needs to be done in this area. Under P4P the United States has 

provided some limited support for rural development in Mexico, including 

technical assistance to the Mexican government’s new rural credit 

institution. The State Department’s Mission Performance Plan and USDA’s 

Unified Export Strategy for Mexico call for building on collaborative 

activities under P4P to pursue rural development and support trade 

liberalization under NAFTA. However, P4P documents generally have little 

to say about furthering the implementation of NAFTA, and P4P action plans 

do not set forth specific strategies or activities that could be used to 

support rural development in support of free trade. 

To aid the full and successful implementation of NAFTA, we recommend 

that the Secretary of State, as the head of one of the lead agencies for the 
Page 4 GAO-05-272 International Trade

P4P initiative, work with the Secretary of Agriculture and other relevant 

officials to develop an action plan under P4P that lays out specific 

collaborative efforts on rural development that would support Mexico’s 

successful transition to liberalized agricultural trade under NAFTA. To 

promote rural development in Mexico and enhance small farmers’ ability to 

benefit from NAFTA, which would also help shape a more positive 

perception of the agreement, we also recommend that the Secretary of 

State work with USDA and other relevant agencies to expand collaborative 

efforts with the Mexican government to facilitate credit availability in the 

countryside. The State Department and USDA generally agreed with our 

recommendations. 

Background Mexico’s accession to the General Agreement on Tariffs and Trade (GATT)

in 1986 initiated a process of market liberalization that provided significant 

opportunities for U.S. agricultural exports.1 By the early 1990s, Mexico had 

become the fastest growing export market for U.S. agricultural products, 

and the United States enjoyed a substantial net agricultural trade surplus 

with Mexico. U.S. agricultural producer groups were generally supportive 

when the United States and Mexico entered into negotiations aimed at 

creating a free trade agreement, which eventually resulted in NAFTA. 

NAFTA Commitments 

Designed to Eliminate Many 

Agricultural Trade Barriers

In negotiating NAFTA, the United States sought to gain additional market 

access for its agricultural exports to Mexico by eliminating Mexican 

agricultural tariffs. Mexico’s agricultural tariffs averaged 10 percent, 

compared to average U.S. tariffs of 4.5 percent at the time NAFTA was 

being negotiated.2

 NAFTA called for Mexico to eliminate tariffs on most 

commodities immediately upon implementation of the agreement in 1994 

and to do away with nontariff trade barriers, most notably its system of

1

The General Agreement on Tariffs and Trade (GATT) was created in 1947 to encourage 

liberalized trade between member states by regulating and reducing tariffs and nontariff 

barriers on traded goods. GATT, which was succeeded by the World Trade Organization 

(WTO) in 1994, functioned as the primary multilateral organization governing international 

trade.

2

See GAO, North American Free Trade Agreement: Assessment of Major Issues, Volume 2, 

GAO/GGD-93-137 (Washington, D.C.: Sept. 9, 1993).
Page 5 GAO-05-272 International Trade

import licensing requirements.3 Some products that Mexico considered to 

be particularly sensitive commodities were granted transition periods for 

tariff elimination to allow time for Mexican producers to adjust to 

increased import competition. 

NAFTA sets forth the specific schedules for tariff elimination and places 

commodities in staging categories, or “baskets,” that define when the 

commodities should enter the market duty-free.4

 In general, tariffs for 

products that were granted transition periods were reduced in equal 

increments over a specified time period (see table 1). However, for certain 

sensitive commodities (such as corn and poultry) the greater part of tariff 

reductions was postponed until the final years of the transition period, a 

practice referred to as “back-loading.” 

Table 1: Conventional NAFTA Tariff Reduction Schedules

Source: NAFTA Chapter 3 and House Doc. 103-159, Volume 1.

3

Before NAFTA, Mexico controlled imports of various commodities by requiring prior 

import permits or licenses and limiting the number of licenses issued for these 

commodities. Prior to NAFTA, about 25 percent of the value of U.S. agricultural exports to 

Mexico were subject to licensing requirements.

4

The Statement of Administrative Action for NAFTA clarifies the tariff reduction rates for 

each of the staging categories.The Statement of Administrative Action is a document that 

was submitted to Congress along with the implementing bill for NAFTA, and describes 

significant actions proposed to implement NAFTA (House Doc 103-159, p. 450).

Staging categories for goods Date of implementation Rate of annual tariff reduction

A – enter duty free January 1, 1994 Not applicable

B – five equal cuts January 1, 1998 20 percent

C – ten equal cuts January 1, 2003 10 percent

C+ – fifteen equal cuts January 1, 2008 6.67 percent

D – continue duty free Not applicable Not applicable
Page 6 GAO-05-272 International Trade

NAFTA also called for Mexico and the other NAFTA partners to replace 

quantitative import restrictions with tariff rate quotas (TRQs). Products 

subject to TRQs enter the importing market duty-free up to the level of the 

quota. Once the duty-free level (quantitative limit) is reached, a duty is 

imposed on the over-quota imports. NAFTA partner countries committed to 

gradually expanding the duty-free quota for the commodities, reducing the 

over-quota tariff charged during the transition period, and ultimately 

eliminating the TRQs. As with the phasing out of tariffs, NAFTA TRQs 

follow the same scheduled transition periods of 4, 9, and 14 years.5

Application of Trade 

Measures under NAFTA Are 

Subject to Disciplines

In addition to providing for the elimination of tariff and nontariff trade 

barriers, NAFTA also established disciplines for the application of trade 

measures to counter threats or harm to domestic producers and 

consumers, such as sanitary and phytosanitary (SPS) requirements,6

antidumping and countervailing duties,7

 and safeguard actions.8 For 

example, NAFTA requires that SPS measures must be science-based, 

nondiscriminatory, and transparent, and that they are applied only to the 

extent necessary to achieve a party’s appropriate level of protection. 

Similarly, under NAFTA the parties are required to follow their domestic 

legal procedures when applying antidumping or countervailing duties 

measures in response to unfair foreign trade practices. NAFTA also calls 

for safeguards to be applied through fair and open administrative 

procedures and for compensation to be provided for the affected countries. 

Under NAFTA, a party’s right to apply a safeguard terminates at the end of 

an agreed-upon transition period. Thereafter, a party may apply the 

5

NAFTA was the first free trade agreement to include TRQs as a method of eliminating 

quantitative restrictions on sensitive commodities. 

6

SPS requirements are measures that protect human, animal, and plant life and health from 

risks arising from animal or plant pests or diseases, food additives, or contaminants. 

Sanitary refers to human or animal health, while phytosanitary refers to plant health.

7

Antidumping duties are a trade remedy that may be imposed to offset the injurious effect of 

unfair pricing practices known as “dumping.” Dumping refers to the sale of a commodity in 

a foreign market at a price lower than its fair market value in the home market. 

Countervailing duties may be imposed on imports that harm or threaten harm to the 

domestic industry to offset subsidies provided to producers in the exporting country.

8

Safeguards are temporary import barriers, usually in the form of duties, which may be 

applied in cases where a domestic industry is determined to be injured or threatened to be 

injured from increased imports. The industry is required to make adjustments during a 

transition period while the safeguard is in place. 
Page 7 GAO-05-272 International Trade

safeguard only with the consent of the exporting party. Moreover, NAFTA 

allows the party applying a safeguard to impose duties only up to the level 

of its Most Favored Nation duties. 

NAFTA Presented 

Challenges and 

Opportunities for Mexican 

Agricultural Sectors

Many studies projected that Mexico would benefit from improved access to 

U.S. agricultural markets for agricultural products under NAFTA. However, 

some observers raised concerns about the difficulties Mexico’s more 

traditional agricultural producers might encounter as the country opened 

up to U.S. products. With more than 22 percent of the population 

dependent on the sector, but with many farmers unable to compete under 

free market conditions, agriculture is a significant yet vulnerable area of 

the Mexican economy. Differences in perceived opportunities and 

challenges resulted from the three distinct types of agricultural producers 

present in Mexico. Mexico’s agriculture sector consists of a large number 

of small traditional farmers, some medium size commercially oriented 

growers, and a lesser number of large modern producers.9

 These groups of 

farmers differ in many respects including farm size, access to capital, types 

of crops produced, and productivity. Small subsistence farmers produce 

primarily corn (maize), often at subsistence levels for self-consumption, in 

small parcels of less than 5 hectares of mostly rain-fed land.10 Corn is also 

among the major U.S. agricultural exports to Mexico, which is perceived by 

some to be in competition with the production of small subsistence 

farmers. Medium size farmers are involved in commercial-oriented 

operations, however, they face relatively high cost structures, which are 

marked by scarcity of capital and insufficiently developed marketing 

infrastructure. Some believe that medium size commercial farmers face the 

greatest impact from import competition and structural change. On the 

other hand, Mexico’s large commercial farmers usually have larger plots of 

irrigated land and a higher productivity level. They have better access to 

capital, including direct investment and commercial lending from abroad. 

Mexican commercial farmers are also typically involved in production of

9

About 75 percent of all Mexican agricultural producers have farms of less than 5 hectares.

10Subsistence farming refers to agricultural production that provides for the basic needs of 

the farmer without surpluses for marketing. According to Mexican government data, around 

85 percent of corn producers have farms of fewer than 5 hectares. 
Page 8 GAO-05-272 International Trade

higher-valued commodities, notably fresh fruits and vegetables, which have 

undergone dynamic export growth since the early 1990s.11

Agricultural trade expansion since NAFTA’s implementation generally has 

been consistent with expectations. While U.S. trade data indicates Mexican 

agricultural exports have done well under the agreement, some observers 

maintain NAFTA has had negative consequences for small farmers. For 

example, one study asserts that employment opportunities for Mexican 

subsistence farmers have declined under NAFTA.12 According to this study, 

imports of cheaper corn have contributed to lower corn prices in Mexico, 

which has led medium size farms to cut back their demand for labor 

supplied by subsistence farmers. However, a December 2003 World Bank 

report noted that NAFTA did not bring about many of the anticipated 

negative effects on poor subsistence farmers and had not had a devastating 

effect on Mexican agriculture as a whole.13 This research notes that as 

consumers, Mexican farmers may have benefited from lower corn prices.14

In addition, corn production in Mexico has not declined, but rather had 

increased by about 14 percent since NAFTA was enacted, to a record high 

in 2003. Other research conducted by several Mexican academic 

institutions concluded that NAFTA had resulted in benefits for the 

country’s farm sector, including increased agricultural exports and greater 

investment in agricultural production.15

11The value of Mexican fruit and vegetable exports to the United States in 2003 real dollars 

almost doubled from about $1.7 billion in 1993 to $3.3 billion in 2003 according to U.S. 

Census data.

12The Environmental and Social Impacts of Economic Liberalization on Corn Production 

in Mexico, study commissioned by Oxfam Great Britain and the World Wildlife Fund 

International, September 2000.

13Daniel Lederman, William F. Maloney, and Luis Serven, Lessons from NAFTA for Latin 

American and Caribbean (LAC) Countries: A Summary of Research Findings, Office of 

the Chief Economist for Latin American and Caribbean, the World Bank, December 2003, 

advance edition.

14USDA points out that rapid urbanization in Mexico has created great political urgency for a 

low-price food policy; food imports help the provision of low-cost food.

15Evaluación integral de los impactos e instrumentación del capítulo agropecuario del 

TLCAN (Comprehensive Evaluation of the Impact and Implementation of NAFTA’s 

Agricultural Chapter), El Colegio de México, Universidad Autónoma de Chapingo, and 

Facultad Latinoamericana de Ciencias Sociales, April 2004.
Page 9 GAO-05-272 International Trade

U.S. Agricultural 

Exports Have Gained 

Greater Access to 

Mexico under NAFTA, 

but Some Market 

Access Barriers 

Remain 

As implementation of NAFTA has progressed over the past decade, Mexico 

has phased out tariffs on agricultural imports in accordance with the 

agreement’s scheduled transition periods of 4, 9, and 14 years and has done 

away with a key nontariff trade barrier, import licensing requirements. U.S. 

agricultural exporters have benefited both from this process of continued 

trade liberalization under NAFTA and from the additional assurances 

provided through the NAFTA dispute settlement mechanism. Exports to 

Mexico have increased significantly since NAFTA, continuing a trend of 

export growth that started in the mid 1980s. However, despite the progress 

made, some U.S. agricultural products continue to experience difficulties 

gaining access to the Mexican market, typically due to antidumping, SPS 

requirements, safeguards, and other trade measures Mexico has put in 

place. These difficulties are not unlike challenges U.S. agricultural exports 

face in other major markets, such as Canada or Japan.

NAFTA Increased Market 

Access and Provided 

Additional Recourse for 

Resolving Disputes 

Although Mexico had taken several steps to allow greater access to its 

markets prior to 1994, NAFTA provided a legal agreement and framework 

through which further market liberalization could take place. Further, 

NAFTA’s dispute settlement mechanism provided U.S. exporters with 

additional rules and processes for resolving disputes that did not exist prior 

to NAFTA. 

Mexico Successfully Reduced 

Tariffs and Other Barriers 

Mexico has thus far implemented its NAFTA commitments by reducing or 

eliminating tariffs according to schedule and removing nontariff barriers, 

resulting in greater access for U.S. agricultural goods. In the latest round of 

tariff eliminations (on Jan. 1, 2003), Mexico eliminated tariffs on more than 

a dozen commodity imports from its NAFTA partners, including products 

important to U.S. producers such as rice, soy oil, and pork. On January 1, 

2003, in accordance with its commitments under NAFTA, Mexico had 

eliminated tariffs or TRQs on all but three commodities: corn, dry beans, 

and milk powder.16 Two of these commodities, corn and beans, are 

considered particularly sensitive commodities for Mexican agriculture 

because they are among the principal crops of small Mexican farmers and 

are also staples of the Mexican diet. TRQs on these commodities are

16Mexico also maintains tariffs until January 1, 2008, on poultry imports under a safeguard 

measure it imposed in July 2003. See discussion below on Safeguards.
Page 10 GAO-05-272 International Trade

scheduled for full elimination by the end of the 14-year transition period in 

2008.17

In addition, Mexico has done away with import licensing requirements, a 

key nontariff barrier. These import licensing requirements functioned, in 

effect, as a type of quota, since only the volume of goods authorized under 

the import license could be imported, and they were intended to protect 

Mexican producers of agricultural commodities that were sensitive to 

foreign competition. Prior to NAFTA, many major U.S. agricultural exports 

to Mexico, such as poultry, dairy, wheat, corn, and dry beans, were subject 

to import licensing requirements. NAFTA permitted Mexico to use phasedin tariff elimination as a mechanism to transition away from the use of 

import licensing requirements. Under the agreement, Mexico immediately 

did away with import licensing requirements and converted them to either 

regular tariffs or TRQs. Additionally, NAFTA set a schedule to gradually 

eliminate both the tariffs and TRQs. 

NAFTA Dispute Settlement 

Provides Additional Recourse for 

U.S. Producers 

NAFTA also benefits U.S. exporters by providing them with a formal 

mechanism for resolving disputes.18 Under the agreement, disputes that 

cannot be resolved through consultations between member countries may 

be brought before impartial, independent panels. Since both the United 

States and Mexico are members of the WTO as well as NAFTA, the United 

States can file trade grievances under the dispute settlement mechanism 

provided by either agreement. According to United States Trade 

Representative (USTR) officials, the United States generally would utilize 

the NAFTA dispute settlement mechanism if it determined that Mexico is in 

violation of a provision that is specific to NAFTA and is not covered under 

the WTO. These officials explained that the United States would rely on the 

WTO’s dispute settlement process if the matter also affected WTO 

members that are not members of NAFTA. According to information 

provided by USTR, to date, the United States has only brought one

17Similarly, the United States is expected to eliminate its remaining tariffs on imports of 

sugar, peanuts, and orange juice from Mexico by 2008.

18NAFTA’s dispute settlement procedures are set forth in four separate NAFTA chapters: 

Chapter 11 (disputes related to investment), Chapter 14 (disputes related to financial 

services), Chapter 19 (disputes related to antidumping and countervailing duties), and 

Chapter 20 (disputes related to the general interpretation or application of the agreement).
Page 11 GAO-05-272 International Trade

agricultural dispute settlement case against Mexico under NAFTA, 

compared to four under the WTO process.19

According to a U.S. Department of Agriculture (USDA) report, most trade 

disputes are resolved through informal discussions or consultations 

involving government and private sector representatives, rather than 

formal dispute settlement procedures.20 For example, through governmentto-industry negotiations, a minimum price agreement was established for 

U.S. apples, and through government-to-government negotiations, an 

agreement was reached to modify Mexico’s dry bean quota auctions. In 

addition, through industry negotiations, a dispute involving U.S. and 

Mexican grape industry labeling regulation was resolved. The use of 

industry negotiations also deterred the Mexican cattle industry from filing 

an antidumping petition against imports of U.S. cattle. Another alternative 

dispute settlement mechanism is the NAFTA Advisory Committee on 

Private Commercial Disputes Regarding Agricultural Goods, which 

recommends less adversarial resolutions to agricultural contract or 

commercial disputes.21

19Under NAFTA, the United States requested consultations regarding Mexico’s application of 

TRQs to dry beans in 2000 (NAFTA 2020), which was settled in 2001. In this case, Mexico 

and U.S. negotiations resulted in an agreement of Mexico’s TRQ allocation through an 

auctioned permit system for dry beans. The United States has requested formal 

consultations with Mexico through the WTO for the following disputes involving 

agricultural products: antidumping investigation on high-fructose corn syrup in 1997 and 

1998 (DS/101 & 132); antidumping duties on imports of hogs in 2000(DS/203); antidumping 

duties on beef and rice in 2003 (DS/295); and tax on beverages in 2004 (DS/308). Mexico has 

revoked its antidumping duties on hog imports and high-fructose corn syrup. Conversely, 

according to USTR, to date Mexico has brought six dispute settlement cases against the 

United States under NAFTA and one under the WTO dispute settlement process. It is worth 

noting that a country’s decision to initiate a case under NAFTA or WTO dispute settlement 

proceedings does not necessarily mean its trade partner’s actions violate provisions of these 

trade agreements.

20United States Department of Agriculture, Effects of North American Free Trade 

Agreement on Agriculture and the Rural Economy, WRS-02-1 (Washington, D.C.: July 

2002).

21The intent is to achieve prompt and effective resolution of commercial disputes, with 

special attention to perishable items. The committee is composed primarily of private sector 

representatives but also has government participants. 
Page 12 GAO-05-272 International Trade

U.S. Agricultural Trade with 

Mexico Has Continued to 

Increase since NAFTA

Since NAFTA’s implementation, total U.S. agricultural exports to Mexico 

have nearly doubled, rising from $4.1 billion in 1993—the last year prior to 

NAFTA’s implementation—to $7.9 billion in 2003 (adjusted for inflation).22

Between 1993 and 2003, the value of U.S. exports to Mexico grew on 

average by 17.4 percent annually. By comparison, U.S. agricultural exports 

to the world grew at an average annual rate of 2.3 percent over the same 

time period. U.S. exports to Mexico have comprised an increasingly larger 

share of the United States’ total agricultural exports; Mexico’s share grew 

from about 8 percent in 1993 to about 13 percent in 2003. Moreover, 

according to USDA’s export strategy for Mexico, the full implementation of 

NAFTA, a growing urban population, increasing per capita income, and 

lack of arable land make Mexico an excellent long-term prospect for U.S. 

agricultural products. 

U.S. agricultural exports to Mexico already underwent significant growth 

after Mexico joined GATT in 1986 and began opening its market to foreign 

trade. By the early 1990s, Mexico attained its position as the third largest 

importer of U.S. agricultural products, after Canada and Japan. The overall 

increases in agricultural exports to Mexico since NAFTA began came about 

despite the collapse of the Mexican peso in late 1994, which harmed 

Mexican purchasing power for foreign goods and triggered an economic 

downturn. Beginning in about 1996, Mexico’s economy began a recovery, 

and U.S. exports to Mexico expanded accordingly. Not all increases in 

exports to Mexico can be attributed to NAFTA because factors such as 

economic growth, weather, exchange rates, domestic supply, and 

population growth also affect Mexico’s demand for U.S. products.

U.S. imports of agricultural products from Mexico have also increased 

since NAFTA, rising from about $2.9 billion in 1993 to $6.3 billion in 2003 

(adjusted for inflation).23 Agricultural imports from Mexico increased at an 

average annual rate of 8.5 percent over the same time period. In 2003, 

agricultural imports from Mexico accounted for about 13 percent of the 

22Export trade values are adjusted for inflation and are presented in 2003 U.S. dollars using 

the Bureau of Economic Analysis End Use Export Index to filter out agricultural product 

price fluctuation. In nominal terms (i.e.,unadjusted for inflation) U.S. agricultural exports to 

Mexico have actually grown from $3.6 billion in 1993 to $7.9 billion in 2003. See appendix I 

for additional information on our methodology.

23Import trade values are adjusted for inflation and are presented in 2003 U.S. dollars using 

the Bureau of Economic Analysis End Use Import Index to filter out agricultural product 

price fluctuation.
Page 13 GAO-05-272 International Trade

total value of U.S. agricultural imports from the rest of the world. Figure 1 

shows the total value of U.S.–Mexico agricultural trade.

Figure 1: Total Value of U.S.–Mexico Agricultural Trade, 1989–2003

Notwithstanding the potential effects of external factors on trade, NAFTA’s 

impact on U.S. exports, particularly for certain key commodities, generally 

appears to have been positive. Earlier studies generally concluded that the 

agreement would increase U.S. export opportunities for grains, oilseeds,

2

4

0

6

8

10 NAFTA implemented Peso crisis

2003 constant dollars in billions

U.S. agricultural imports from Mexico

U.S. agricultural exports to Mexico

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.
Page 14 GAO-05-272 International Trade

dairy products, tree nuts, and meats.24 Trends in the trade of the largest 

groupings of U.S. agricultural products have been generally consistent with 

these predictions. For example, the United States increased exports of 

animal products, grains and feeds, fruits and vegetables, and oilseeds to 

Mexico since NAFTA.25 From NAFTA’s implementation in 1994 until 2003, 

the value of exports of these key groups of products underwent average 

annual increases of between 3.2 percent (oilseeds) and 16 percent (grains 

and feeds) (see fig. 2).26

24Several studies conducted prior to NAFTA concluded that market liberalization, combined 

with the demands of a growing population and an expanding economy in Mexico, would 

provide opportunities for the United States to export greater amounts of agricultural 

products to Mexico. Our earlier work in a series of three reports on U.S.–Mexico 

agricultural trade also concluded that increased liberalization of agricultural trade would

generally be beneficial for the U.S. agriculture industry. See GAO, U.S.–Mexico Trade 

Impact of Liberalization in the Agricultural Sector, GAO/NSIAD-91-155 (Washington, D.C.:

Mar. 29, 1991); GAO, U.S.–Mexico Trade: Extent to Which Mexican Horticultural Exports

Complement U.S. Production, GAO/NSIAD-91-94BR (Washington, D.C.: Mar. 20, 1991); and U.S.–

Mexico Trade: Trends and Impediments in Agricultural Trade, GAO/NSIAD-90-85BR

(Washington, D.C.: Jan. 12, 1990).

25In 2003, exports of these products accounted for 85 percent of the total value of U.S. 

agricultural exports to Mexico. 

26Export trade values for these commodity groups are adjusted for inflation and are 

presented in 2003 U.S. dollars using Harmonized System Export Indexes to filter out 

agricultural product price fluctuation.
Page 15 GAO-05-272 International Trade

Figure 2: Figure 2: U.S. Agricultural Exports to Mexico by Largest Product Groups, 

1994–2003

Despite Progress, Market 

Access Barriers Remain

Some U.S. agricultural products continue to experience difficulties gaining 

access to the Mexican market due to the application of nontariff trade 

measures. Although Mexico removed import licensing requirements, a key 

nontariff trade barrier prior to NAFTA, it still applies several nontariff 

measures that affect imports from the United States. According to USDA, 

the nontariff measures that present the most significant barriers to market 

access for U.S. agricultural exports have been Mexico’s application of 

antidumping duties, SPS requirements, and safeguards. In addition to these 

trade measures, Mexico has put in place a product tax on all beverages 

containing sweeteners other than sugar, which has basically eliminated the 

Mexican market for high-fructose corn syrup (HFCS).27 However, these 

2003 constant dollars in billions

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Fruits and vegetables

Oilseeds

Animals and products

Grains and feeds

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

27HFCS is a food sweetener derived from corn and is found in numerous foods and 

beverages. 
Page 16 GAO-05-272 International Trade

impediments are not unlike market access challenges experienced by U.S. 

agricultural exports to other major trade partners, including Canada, 

Japan, and the European Union.

The following section presents information on the key nontariff barriers 

and examples of U.S. agricultural commodities that have encountered 

market access challenges in Mexico. The information is based, in part, on 

our analysis of market access issues related to seven selected agricultural 

commodities: apples, beef, corn, HFCS, pork, poultry, and rice. Our 

analysis of each of these commodities is presented in greater detail in 

appendix II.

Antidumping Actions The use of antidumping duties continues to pose a barrier to U.S. 

agricultural exports to Mexico. The United States has raised complaints in 

the WTO regarding Mexico’s application of its antidumping laws on 

commodities such as hogs, rice, and beef.28 The United States requested a 

WTO panel with respect to rice and has argued that Mexico’s imposition of 

antidumping duties is inconsistent with the WTO Antidumping Agreement. 

Mexican officials at the Ministry of the Economy (Secretaría de Economía) 

stated that Mexico’s application of antidumping measures to U.S. 

agricultural imports was based on an objective and intensive investigation 

that determined harm. According to representatives from some U.S. 

producer groups and a former senior Mexican government official, 

however, there may also be other considerations that affect Mexico’s 

antidumping decisions. For example, U.S. apple producers question the 

timing of Mexico’s imposition of antidumping duties on apples in August 

2002, only a few months before NAFTA’s tariff rate quota on apples was 

scheduled to be lifted on January 1, 2003. Additionally, these observers told 

us that Mexico’s antidumping actions against certain U.S. agricultural 

imports are, to some extent, a response to U.S. restrictions on Mexican 

exports to the United States.

28WTO Cases DS/203 and DS/295.
Page 17 GAO-05-272 International Trade

Sanitary and Phytosanitary 

Measures

NAFTA establishes a number of general requirements to ensure that SPS 

measures are only used to the extent necessary to protect plant, animal, 

and human health and not as a means to protect domestic producers 

fromcompetition.29 As mentioned earlier, NAFTA calls for these measures 

to be science based, nondiscriminatory, and transparent and requires that 

the measures be applied only to the extent necessary to achieve an 

appropriate level of protection. Mexican officials responsible for plant and 

animal health protection maintain that Mexico’s SPS measures are based 

on sound science. However, USDA officials and industry group 

representatives have raised concerns about the legitimacy of some SPS 

measures imposed by Mexico on U.S. agricultural imports as it eliminates 

tariffs and tariff-rate quotas. U.S. producer groups told us that they believe 

Mexico sometimes uses SPS measures as a means to retaliate for U.S. 

policies against its agricultural exports to the United States. For example, 

some U.S. producer groups contend that in order to protest U.S. 

phytosanitary controls on imports of avocados from Mexico, Mexico’s 

agricultural authorities initiated a new policy against U.S. cherries 

requiring cherry exports to Mexico to undergo a much more rigorous 

inspection process at the border than is warranted. As a result, U.S. exports 

of cherries to Mexico dropped significantly because U.S. exporters wanted 

to avoid delays at the border that would pose risks with such a perishable 

commodity. Moreover, the 2004 proposed work-plan of phytosanitary 

measures was not signed. Table 2 illustrates examples of SPS controversies 

between the United States and Mexico.

29The NAFTA partners also agreed to work through the NAFTA Committee on Sanitary and 

Phytosanitary Measures to facilitate technical cooperation in the development, application, 

and enforcement of SPS measures. 
Page 18 GAO-05-272 International Trade

Table 2: Examples of SPS Controversies between the United States and Mexico

Source: Proceedings of the Eighth Agricultural and Food Policy Systems Information Workshop, January 2004, Puerto Vallarta, Mexico. 

The workshop was sponsored by the Farm Foundation and organized by Texas A&M University; the University of Guelph, Ontario, 

Canada; and Colegio de Mexico. 

U.S. officials explained that SPS measures are the most commonly used 

nontariff measure affecting U.S. market access and may indeed, at times, 

be applied to protect domestic producers. According to U.S. and Mexican 

officials, determining when SPS measures are justified can be difficult for 

several reasons, including different country standards and different 

conclusions based on scientific data. Officials from USDA’s Animal and 

Plant Health Inspection Service (APHIS) and its Mexican counterpart 

SENASICA (Servicio Nacional de Sanidad, Inocuidad y Calidad 

Agroalimentaria) informed us that they are working to harmonize U.S. and 

Mexican SPS standards to minimize disagreements. In addition, they are 

collaborating to lift Mexico’s ban on imports of citrus from Arizona and 

areas in Texas due to concerns over fruit fly infestation, as well as to design 

and implement a more satisfactory inspection process for U.S. apple 

exports to Mexico.

SPS disputes stemming from differing interpretations of scientific data or 

differences in regulatory standards illustrate the technical complexity of 

plant and animal health protection regulations and their impact on trade. 

U.S. officials told us that working through SPS issues with Mexican 

authorities under NAFTA provided lessons for later negotiations. They 

Item:

Importer/Exporter Description 

Red meats

Mexico/U.S.

Mexico recently changed the location of inspection of meat 

imports from the United States. Under the previous system, 

Mexican inspectors had inspected the U.S. meat loads on the 

U.S. side of the border. Now the loads are inspected in Mexico. 

Even though the loads carry a U.S. Food Safety and Inspection 

Service export inspection certificate, several loads, either whole 

or partial, have been rejected in Mexico, creating a complex 

problem for disposal of the meat. The loads must be re-exported 

to the United States or destroyed in Mexico.

Apples

Mexico/U.S.

Mexico required preshipment inspection and approval of U.S. 

exports of apples to Mexico by Mexican inspectors in the United 

States. U.S. packers and exporters pay the cost. Mexico delayed 

withdrawing its oversight until 2004.

Dry beans

Mexico/U.S.

Mexico denied entry to U.S. dry bean exports in early 2003 as a 

result of a new emergency standard governing the phytosanitary, 

quality, and labeling requirements for imported beans for human 

consumption.
Page 19 GAO-05-272 International Trade

explained that as developing countries liberalize their markets and begin to 

develop mechanisms to address health risks associated with increased 

agricultural trade, they often need technical assistance. Thus, the United 

States provided trade capacity building assistance to address SPS issues for 

some Central American countries and the Dominican Republic in 

connection with free trade agreement negotiations with those countries.30

The USDA Unified Export Strategy for Mexico notes that beyond 

addressing individual SPS issues there must be broader cooperation with 

Mexico on technical issues, such as the harmonization of standards, 

equivalency of regulatory processes, and transparency in light of the 

increasing market integration of the two countries.

Safeguards U.S. government officials and U.S. agricultural producer groups told us that 

Mexico’s application of certain safeguards to U.S. agricultural products 

have been a trade nuisance. In the years following NAFTA, Mexico has 

applied special safeguard agricultural provisions on imports of U.S. live 

swine, pork, potato products, and fresh apples in the form of TRQs as 

provided for in NAFTA. Mexico also applied a safeguard under Chapter 8 of 

NAFTA on certain U.S. poultry products. Specifically, under NAFTA, 

Mexico’s TRQ on poultry products was to be eliminated on January 1, 2003. 

However, in late 2002, Mexico’s poultry industry petitioned the Mexican 

government to impose a safeguard on U.S. chicken leg quarters. The 

Mexican industry argued that the elimination of Mexico’s TRQ would result 

in a surge in imports from the United States which would injure Mexican 

producers. USTR officials said the safeguard on poultry was a unique 

situation and questioned whether a similar arrangement could be achieved 

in other industries. For more information on U.S. poultry exports to 

Mexico, see appendix II.

The poultry case also highlights difficulties encountered in the 

implementation of a safeguard due to trade data discrepancies. The United 

States and Mexico did not agree on the quantity of U.S. chicken leg quarters 

30Trade capacity building is assistance intended to help developing countries benefit more 

broadly from a rules-based trading system. The Bipartisan Trade Promotion Authority Act of 

2002 (Title XXI of the Trade Act of 2002, P.L. 107-210, Section 2102) declared that among the 

principal negotiating objectives of the United States are to strengthen the capacity of U.S. 

trading partners. Specific categories of trade capacity building assistance included trade 

facilitation; human resources and labor standards; agricultural development, such as 

promoting agribusiness; financial sector development; and infrastructure development. See 

GAO’s recent report U.S. Trade Capacity Building Extensive, but Its Effectiveness Has Yet 

to be Evaluated, GAO-05-150 (Washington, D.C.: Feb. 11, 2005).
Page 20 GAO-05-272 International Trade

that were exported to Mexico in the first half 2003. Mexican data showed a 

much larger surge than U.S. data. One U.S. official told us that the main 

reason for the large discrepancy was the way Mexico records its initial 

import statistics, which is based on notifications of intended imports filed 

by Mexican importers, rather than actual imports. After the TRQ on poultry 

expired on January 1, 2003, Mexican importers filed large number of 

entries, but some never crossed the border. In response to these 

difficulties, Mexican officials informed us they have taken steps to clear 

notices of intended imports from their database when imports do not 

actually occur within a specified time frame. 

Tax on Sweeteners Other than 

Sugar 

In addition to the trade measures discussed above, Mexico has imposed a 

tax on beverages made with sweeteners other the sugar, which has led to a 

strongly contested dispute between the United States and Mexico 

regarding market access for U.S. HFCS exports. Specifically, in January 

2002, the Mexican Congress imposed a 20 percent product tax on soft 

drinks and other beverages that use any sweetener other than cane sugar. 

This action meant that Mexico taxes any beverage containing HFCS, no 

matter the amount of HFCS present, at a rate of 20 percent, in addition to 

any other taxes already imposed. U.S. importers and producers of HFCS 

were affected immediately as Mexican beverage manufacturers switched to 

the use of domestically produced sugar instead of HFCS imported primarily 

from the United States. Although the tax was temporarily suspended by 

presidential decision for a 4-month period, Mexico’s Supreme Court of 

Justice unanimously voted to nullify this decision in July 2002. As a result, 

the tax was imposed once again. In December 2002, the Mexican Congress 

voted to extend the tax. In 2004, the United States filed a dispute case in the 

WTO against Mexico’s product tax on HFCS.31 The case is still pending 

resolution. See appendix II for more information on the HFCS case.

31WTO Case DS/308.
Page 21 GAO-05-272 International Trade

Mexico Enacted 

Various Agricultural 

Programs in Response 

to Trade Liberalization, 

but Structural 

Problems Impair 

Growth and Challenge 

NAFTA 

Implementation

Since the early 1990s, the Mexican government has enacted several 

agricultural assistance programs to help farmers adjust to the changes 

brought by trade liberalization, including NAFTA. Rapid urbanization has 

also created political urgency to provide low-cost food by promoting 

greater efficiency in domestic food production. The three main programs 

had a total budget of over $2 billion in 2003, and their objectives range from 

income support to improving agricultural productivity. However, deepseated structural problems, notably tenuous land ownership and lack of 

rural credit, continue to hinder growth and rural development. Opponents 

of NAFTA have sought to link lagging rural development and rural poverty 

in Mexico to growing imports of U.S. agricultural products. They oppose 

further tariff eliminations as called for under NAFTA and demand a 

renegotiation of the agricultural provisions of the agreement. This 

opposition presents challenges to Mexico’s successful transition to 

liberalized agricultural trade under NAFTA.

Mexico Has Implemented 

Several Agricultural 

Programs and Polices

In response to the changes that market reforms and free trade would bring 

to its agricultural sector, Mexico enacted various agricultural programs and 

policies since the early 1990s to help farmers adjust to changing economic 

conditions. Three of the most significant agricultural assistance programs 

have been (1) a major cash transfer program, PROCAMPO (Programa de 

Apoyos Directos al Campo); (2) an investment program, Alianza (Alianza 

para el Campo); and (3) a marketing support program (Programa de 

Apoyos Directos al Productor por Excedentes de Comercialización para 

Reconversión Productiva, Integración de Cadenas Agroalimentarias y 

Atención a Factores Críticos, formerly Programa de Apoyos a la 

Comercialización y Desarrollo de Mercados Regionales). Besides these 

three programs, there are other support programs in rural Mexico, such as 

Progresa, which was introduced in 1997 to alleviate poverty through 

monetary and in-kind benefits, as well as to invest in education, health and 

nutrition.

The three major agricultural assistance programs have different levels of 

budget and distinct objectives. Appendix III provides a detailed description 

of each program.

• PROCAMPO is the largest program in terms of annual budget, 

amounting to over $1.2 billion in 2003. It provides direct payments to 

oilseeds and grains (including corn) producers on a per-hectare basis. In 

2001, it supported 2.7 million producers on 13.4 million hectares. Its 
Page 22 GAO-05-272 International Trade

objectives are to compensate farmers for expected losses under trade 

liberalization and the elimination of price subsidies, to make the free 

trade agreement acceptable to farmers, to alleviate poverty, and to 

reduce migration from rural areas.

• Alianza has an annual budget of around $570 million and supports about 

2 million farmers. The program provides matching grants to finance 

productive investments and support services. The overall objective of 

the program is to improve agricultural productivity by promoting a 

transition to higher value crops, improving livestock health, facilitating 

technology transfers, and attracting investment in infrastructure. 

• The marketing support program had an annual budget of about $580 

million in 2003 and benefits 240,000 producers. It provides payments to 

producers of grains and oilseeds in certain areas, usually on a per-ton 

basis. The Mexican government’s evaluation suggests that the program 

provides certainty to farmers’ income and is an important factor in 

mitigating migration from the countryside.

Lagging Rural Development 

in Mexico Fuels Concerns 

about the Long-term 

Success of NAFTA

Notwithstanding various farm support programs including the ones 

discussed above, some researchers and Mexican and U.S. government 

officials noted that Mexico still needs to address structural impediments 

that hinder rural development. Some of these problems are related to 

Mexico’s tenuous land ownership, known as the ejido system.32 Some 

economists argue that the small size of farm plots under the ejido system 

does not make for economically viable production units. In addition, the 

ejido system limits farmers’ ability to obtain credit using land as collateral 

because the farmers do not have clear ownership of the land. Without 

access to credit, farmers cannot shift to new technologies and increase 

productivity. According to experts, the lack of rural credit has been a key 

impediment to Mexican agricultural development. Mexico’s financial crisis 

32Ejido is a form of land tenure arrangement. It does not allow for full property rights. In the 

aftermath of Mexico’s revolution (1910–1917), the Mexican government began to dismantle 

the country’s large haciendas and distributed the land in ejidos and Indian communes. The 

reform succeeded in fragmenting Mexico’s agricultural land to a very large extent. Each

ejidatario or comunero was provided approximately 30 hectares to work on. In order to 

prevent the re-emergence of large haciendas, the Mexican Constitution prohibits individuals 

from owning more than 100 hectares of irrigated land. Neither ejidos nor the Indian 

communes allow for full property rights. Ejidos and Indian communal land cannot be used 

as guarantees for credit because banks are not allowed to take them over if repayments are 

not made.
Page 23 GAO-05-272 International Trade

of 1995 exacerbated the problem of rural development by severely limiting 

the Mexican government’s budget available to carry out programs to invest 

in rural areas. In addition, according to USDA, other challenges identified 

by experts that contribute to the lack of rural development include: low 

education level, poor rural infrastructure, environmental problems related 

to land use, and low levels of technology. 

While U.S. officials note that NAFTA has greatly benefited Mexican 

agriculture overall, they express concern about the challenges posed by 

lagging rural development to the long-term successful implementation of 

the agreement. U.S. officials caution that lagging rural development fuels 

the arguments made by opponents of NAFTA that cheap imports from the 

United States have depressed Mexican agricultural product prices, hurting 

small farmers and deepening rural poverty. In its fiscal year 2005 Unified 

Export Strategy for Mexico, USDA acknowledged the need for efforts to 

highlight the benefits of NAFTA for Mexico’s economy while seeking ways 

to help Mexico address its rural development issues.

The implementation of NAFTA became a major political issue as Mexico 

prepared to eliminate tariffs and tariff rate quotas in January 2003. 

Elimination of these tariffs provided U.S. agricultural exports even greater 

access to the Mexican market. In order to respond to intense criticism by 

the opponents of NAFTA at that time, USDA officials had to engage in 

extensive dialogue with Mexican legislative and executive officials, and 

they mounted a public information drive to explain the benefits of NAFTA 

for Mexican agriculture. Ultimately Mexico eliminated the tariffs, but the 

administration of Mexican President Vicente Fox found it necessary to 

negotiate a national agreement on agriculture with various domestic 

constituencies. He intended the agreement—referred to as Acuerdo 

Nacional para el Campo—to address concerns about perceived negative 

effects of trade liberalization on Mexico’s rural poor. As part of this 

agreement, the Mexican government commissioned several Mexican 

academic institutions to study the impacts of NAFTA on Mexican 

agriculture. This research generally confirmed that structural problems 

confronting Mexican agriculture preceded the implementation of NAFTA. 

However, certain Mexican producer groups continue to pressure the 

government, and a number of members of Mexico’s Congress have strong 

ties to groups that oppose NAFTA.

U.S. and Mexican government officials and agricultural experts warned 

that there may be considerable opposition to the next round of tariff 

elimination in 2008. These officials cited the experience in the months 
Page 24 GAO-05-272 International Trade

leading up to the latest round of agricultural tariff elimination in 2003. In 

addition, they note that corn, one of the three remaining commodities 

scheduled to have tariffs lifted in 2008, is a commodity of particular 

concern in Mexico. Corn cultivation has ancient roots in Mexican rural 

culture; is central to the Mexican diet, accounting for about one-third of 

total calories; and remains the principal crop of subsistence farmers. For 

these reasons, eliminating tariffs on corn will be a sensitive cultural issue, 

as well as a matter of economic concern. 

Certain farm groups in Mexico have argued that allowing cheap imports of 

U.S. corn will drive the Mexican agriculture into ruin. Mexican politicians 

who oppose NAFTA note the continuing economic distress in rural areas of 

Mexico and insist on renegotiation of the agricultural provisions of the 

agreement to improve the conditions of Mexican farmers. Although the 

total elimination of already low Mexican tariffs on corn may not have much 

economic significance for U.S. producers, failure to comply with the final 

phase of tariff elimination may undercut support for NAFTA among U.S. 

producers who were in favor of the agreement with the expectation that it 

would lead to genuinely free trade. Additionally, U.S. trade officials have 

expressed serious reservations about any attempt to renegotiate the 

agricultural provisions of NAFTA, because it could lead to demands to 

renegotiate other aspects of the agreement and undermine the agreement 

as a model for trade liberalization throughout the Western Hemisphere. 

U.S. Agencies 

Undertake 

Collaborative 

Agricultural Efforts, 

but Do Not Focus on 

Rural Development 

Challenges to Mexico’s 

Transition to 

Liberalized Trade 

Over the last 10 years, U.S. agencies, primarily led by USDA, have carried 

out numerous activities that benefit both U.S. and Mexican agricultural 

interests. However, these activities have not been intended to address the 

challenges presented by lagging rural development to Mexico’s transition to 

liberalized trade under NAFTA. While the United States provides technical 

assistance to more recent free trade partners to facilitate their adjustment 

to trade liberalization, no such assistance was arranged for Mexico under 

NAFTA. Nevertheless, since 2001 the United States has supported 

collaborative efforts to promote economic development in the parts of 

Mexico where growth has lagged under the Partnership for Prosperity 

(P4P) initiative. Officials from both countries are working on a broader 

approach to Mexican rural development under the initiative, but they 

recognize that much still needs to be done in this area. In an effort to 

support rural development through P4P, the United States has provided 

some limited technical assistance to the Mexican government’s new rural 

lending institution. Recognizing the importance of rural development to the 

successful implementation of NAFTA, State Department and USDA 
Page 25 GAO-05-272 International Trade

strategies for Mexico call for building on collaborative activities under P4P 

to pursue the related goals of rural development and trade liberalization 

under NAFTA; however, the P4P action plans do not set forth specific 

strategies and activities that could be used to achieve these goals.

United States Pursues Many 

Collaborative Agricultural 

Efforts in Mexico

Historically, U.S. agencies have undertaken numerous collaborative 

agricultural efforts of mutual interest with their Mexican counterparts; 

however, the agencies have not intended those efforts to address the 

challenges presented by lagging rural development. USDA, in conjunction 

with its Mexican counterparts, has led most of these efforts as part of its 

traditional mission of supporting U.S. agricultural production and exports. 

With the exception of pest eradication efforts sponsored by the Animal and 

Plant Health Inspection Service (APHIS)—approximately $280 million over 

the past 10 years—all USDA activities have involved modest funding of less 

than $8 million combined since NAFTA was implemented.

Some U.S. agencies have been involved in collaborative efforts with Mexico 

in pursuit of plant, animal, and human health objectives. USDA’s APHIS and 

Food Safety and Inspection Service and the Food and Drug Administration 

have implemented several programs in Mexico to protect U.S. agriculture 

and consumers while also facilitating the export of Mexican agricultural 

products. For example, APHIS programs are working with the Mexican 

government and growers to eradicate the Mediterranean fruit fly. 

Eradicating the fruit fly is of great interest for U.S. fruit farmers. However, 

eliminating the fly would also allow Mexican farmers to eventually export 

fruit crops from formerly infested areas. Over the past 10 years APHIS has 

used almost all of its funds in Mexico for collaborative projects to finance 

various pest eradication efforts.

USDA’s research, data collection, and marketing agencies, such as the 

Economic Research Service (ERS), National Agricultural Statistics Service, 

and Agricultural Marketing Service, have worked with their Mexican 

counterparts to enhance Mexico’s capacity to collect, analyze, and 

disseminate agricultural information. According to ERS officials, these 

efforts have improved and facilitated agricultural trade transactions 

through the Emerging Markets Program. Economic Research Service 

officials said that while the focus of the Emerging Markets Program is to 

improve Mexico’s data gathering and reporting systems, USDA has also 

benefited from Mexico’s improved capabilities because having reliable 

information facilitates public and private decision making for both the 

United States and Mexico.
Page 26 GAO-05-272 International Trade

The Agriculture Research Service and the International Cooperation and 

Development area of USDA’s Foreign Agriculture Service have participated 

in extensive scientific and academic research to improve Mexico’s 

agricultural production. According to the Agriculture Research Service, 

there are several concerns over agricultural trade, including food safety, 

use and consumption of transgenic products,33 and control of plant and 

animal pests and diseases. For a list and description of collaborative 

activities with Mexico implemented by USDA agencies, see appendix IV. 

NAFTA Did Not Provide 

Technical Assistance to 

Strengthen Mexico’s Trade 

Capacity

While the United Sates has provided technical assistance and support to 

more recent free trade partners through trade capacity building (TCB), no 

such assistance was arranged for Mexico when NAFTA was concluded in 

1994. TCB became an element of U.S. trade policy after it was introduced 

under the WTO Doha Development Agenda in 2001.While it was recognized 

that some agricultural sectors in Mexico would find it challenging to adjust 

to free market conditions when NAFTA was being negotiated, the 

agreement did not require that Mexico should receive any assistance to 

facilitate the transition of its farmers to a more open market. 

One senior Mexican government official noted that in hindsight TCB or 

some type of assistance like it would have been beneficial as Mexico 

entered into a free trade environment with two very strong economies (the 

United States and Canada). However, this official stressed that Mexico has 

done very well under NAFTA overall, although small farmers have not 

typically benefited from economic opportunities provided by the 

agreement. Even though the United States does not have a comprehensive 

effort to provide TCB assistance to Mexico, some U.S. agencies have 

undertaken limited activities in Mexico, which they have characterized as 

TCB.

P4P Introduced a Broader 

Approach to Rural 

Development 

In 2001, U.S. President George W. Bush and Mexican President Vicente Fox 

launched the P4P initiative, a new model for bilateral cooperation involving 

a public–private approach to collaborative development efforts. This new 

initiative is aimed at assisting those economically depressed regions of 

Mexico that are the primary sources of migration. These areas tend to be 

33Transgenic products refer to a plant or animal variety that contains genes from a different 

species transferred using genetic engineering techniques.
Page 27 GAO-05-272 International Trade

rural regions in Mexico. While P4P seeks to create a new model for 

collaborating on economic development in Mexico, officials from both 

countries recognize that few activities have been implemented under P4P 

that directly affect poor rural areas and that much still needs to be done in 

the area of rural development.

P4P Expanded Collaborative 

Activities to New Areas, but 

Many Rural Regions of Mexico 

Remain Untouched

P4P seeks to create a public–private alliance and develop a new model for 

U.S.–Mexican bilateral collaboration to promote development, particularly 

in regions of Mexico where economic growth has lagged and has fueled 

migration. No new funds were specifically allocated to P4P by either 

government; instead, the U.S. government sought to refocus resources 

already devoted to Mexico to create a more efficient collaborative network. 

According to State Department and USDA officials, since its establishment, 

P4P has become the umbrella for bilateral development collaboration and 

providing a broader approach to Mexico’s rural development needs that 

includes occupational and economic alternatives for people in the 

countryside. 

While this broader approach to rural development has been embraced by 

both the United States and Mexico, few activities have been implemented 

under P4P that directly affect poor rural areas. At the most recent P4P 

conference in Guadalajara, Mexico, a high-level State Department official 

responsible for P4P noted that many rural areas throughout central and 

southern Mexico have not yet been touched by P4P. Similarly, Mexican 

government officials commented that even though the P4P concept holds 

much promise, only a few new activities have been undertaken in rural 

development. For example, Mexican government officials told us and U.S. 

government documents confirm that approximately $10 million allocated 

for USAID rural development activities in Mexico under P4P have not yet 

been used to fund any new projects.34

34In recent months USAID has obligated funds for several rural development activities in 

Mexico. See appendix V for a description. 
Page 28 GAO-05-272 International Trade

Nevertheless, since the initiation of P4P, there have been several first-time 

achievements that benefit Mexico’s overall economic development. For 

example, under an arrangement worked out by the U.S. and Mexican 

government in cooperation with private sector financial institutions, the 

cost of remittances from the United States to Mexico has dropped by more 

than 50 percent over the last 3 years.35 Remittances from Mexican laborers 

living in the United States reached a record $16.6 billion in 2004. In 

addition, in 2003 a bilateral agreement was reached through P4P to allow 

the U.S. Overseas Private Investment Corporation (OPIC) to operate in 

Mexico for the first time. The agency’s mission is to help U.S. businesses 

invest overseas to foster economic development in new and emerging 

markets. According to OPIC officials, for over 30 years there had been 

resistance by the Mexican government to allow the agency to operate in 

Mexico because of concerns over sovereignty. Since the bilateral 

agreement was signed, the OPIC has provided financing to five projects in 

Mexico, including one related to agriculture. For a description of this and 

other activities related to rural development by U.S. agencies under P4P, 

see appendix V.

Under P4P, the United States 

Supports Efforts to Facilitate 

Rural Access to Credit

One of the few P4P activities to target rural communities is the U.S. 

technical assistance provided to the Mexican government’s new rural 

lending institution, Financiera Rural.36 Financiera Rural supports 

agricultural and other economic activities in Mexico’s rural sector with the 

goal of raising productivity as well as improving the standard of living of 

rural populations by facilitating access to credit. Through the USDA 

Cochran Fellowship Program, several Financiera Rural officials were 

trained in the United States on how to operate a rural credit program. 

These officials will serve as trainers for credit managers for Financiera 

Rural. In addition, through a USAID fellowship, USDA arranged for a U.S. 

expert to assist Financiera Rural in developing a strategic plan. This 

strategic plan calls for the development of rural financial lending 

intermediaries in Mexico, which will be fostered using a model that 

complies with Mexico’s legal framework, determined by a study to be 

conducted jointly by the Financiera Rural and the Inter-American 

Development Bank. The new strategic plan also proposes that Financiera 

35Remittances refer to the portion of international migrant workers’ earnings sent back from 

the country of employment to the country of origin.

36Mexico established Financiera Rural in 2002, and it is still in a development stage. It 

replaced an earlier Mexican government agricultural lending institution, Banrural, which 

went bankrupt because of high operating costs.
Page 29 GAO-05-272 International Trade

Rural fund any productive endeavor in the countryside, not only 

agricultural production. Activities could include eco-tourism, rural gas 

stations, transportation services, and so on. According to senior Financiera 

Rural officials, U.S. technical assistance under P4P has been instrumental 

in helping them roll out their rural credit program. 

Financiera Rural officials told us that while the assistance they have 

received under P4P has had a positive impact, it has been limited. They said 

that Financiera Rural faces a great challenge in efforts to address limited 

credit availability in the countryside, which, as noted earlier in this report, 

is a key factor in Mexico’s lagging rural development. In order to be able to 

establish an effective rural lending system for small and medium size 

farmers in Mexico, these officials explained that they need to shift from 

primarily short-term to long-term credit, develop a network of regional and 

local intermediary lending institutions, and provide financing for 

alternative rural economic activities beyond direct agricultural production. 

Mexican and U.S. officials told us that in order to accomplish these goals 

Financiera Rural needs to develop expertise in a number of areas, such as 

risk assessment, project management, and loan evaluation. These officials 

stated that the expertise in the field of rural credit that exists in the United 

States would be helpful in ensuring that Financiera Rural is successful in 

providing credit to small farmers and other entrepreneurs in the Mexican 

countryside.

P4P Does Not Specify 

Activities to Promote Rural 

Development in Support of 

Mexico’s Transition to 

Liberalized Trade under 

NAFTA

P4P offers an avenue for the United Sates to provide technical assistance 

and support to Mexico similar to what it has provided to more recent free 

trade partners through TCB, according to a senior USDA official. Similarly, 

Mexican officials said P4P provides the opportunity to make technical 

assistance available in areas such as rural development, which have not yet 

benefited from NAFTA. Recognizing the importance of rural development 

to the full and successful implementation of NAFTA, the State 

Department’s Mission Performance Plan and USDA’s Unified Export 

Strategy for Mexico call for building on collaborative activities under the 

P4P to pursue rural development and support trade liberalization. 

However, P4P documents generally have little to say about furthering 

Mexico’s successful transition to liberalized agricultural trade under 

NAFTA, and P4P action plans do not set forth specific strategies and 

activities that could be used to advance rural development in support of 

free trade. 
Page 30 GAO-05-272 International Trade

The lack of specific plans under P4P to pursue rural development in 

support of NAFTA is particularly noteworthy because USDA officials 

expressed concerns that Mexico’s lagging rural development presents a 

challenge to the successful transition to liberalized trade under NAFTA, 

including the elimination of remaining tariffs in 2008. USDA officials noted 

that the underlying factors in Mexico’s lagging rural development are 

structural and need to be addressed internally by Mexico. Nevertheless, 

USDA’s Unified Export Strategy for Mexico calls for coordination with the 

U.S. Agency for International Development to pursue a rural development 

strategy under the rubric of the P4P initiative. This document also 

acknowledges the need to continue to underscore the benefits of free trade 

for Mexico under NAFTA while seeking ways to help Mexico address its 

rural development issues. USDA officials stressed that it is critical to 

change the debate from the need for protection from U.S. imports to 

promoting rural development in Mexico so that small and medium farmers 

can take advantage of the opportunities provided by free trade.

Conclusions As tariffs and tariff-rate quotas have been reduced or eliminated under the 

provisions of NAFTA, Mexican authorities have come under pressure to put 

in place technical barriers to protect producers from perceived harm from 

growing U.S. imports. Moreover, while Mexico has taken the steps called 

for under NAFTA to liberalize trade, lagging rural development fuels 

opposition to further implementation of the agreement. Yet the full and 

successful implementation of NAFTA is an important factor in assuring 

market access for United States agricultural exports to Mexico, and it is 

critical to broader U.S. trade interests because NAFTA is a model for trade 

liberalization in the Western Hemisphere. While the strategies of U.S. 

agencies in Mexico see an opportunity to build on the P4P initiative to 

pursue the related goals of rural development and trade liberalization 

under NAFTA, P4P documents generally have little to say about NAFTA. 

More specifically the P4P action plans do not set forth specific strategies 

and activities that could be used to advance rural development in support 

of free trade. P4P offers an opportunity for the United States to design a 

multi-agency comprehensive strategy to address the challenges presented 

by lagging rural development to Mexico’s transition to liberalized 

agricultural trade under NAFTA, rather than providing assistance through 

individual measures.

Mexico’s experience adjusting to the challenges of trade liberalization, 

ranging from difficulties associated with the application of SPS measures, 

problems raised by trade data discrepancies with the United States, and 
Page 31 GAO-05-272 International Trade

lagging rural development, illustrate the importance of technical 

assistance. While Mexico did not seek assistance under NAFTA to adjust to 

trade liberalization, the U.S. government has acknowledged the usefulness 

of technical assistance in addressing such challenges by providing TCB 

assistance in later trade agreements with developing countries. In Mexico, 

P4P offers an avenue for the United States to provide such technical 

assistance. A key impediment to Mexican rural development is the lack of 

credit in the countryside, and the United States with its significant 

experience in rural lending has the technical expertise Mexico seeks. 

Moreover, most of Mexico’s structural impediments must be dealt with 

internally, but facilitating rural credit is one area in which the United 

States, through P4P, is in a position to collaborate with Mexico. Improving 

the rural economy through credit facilitation increases the opportunities 

for Mexican importers of U.S. agricultural commodities and begins to 

counter negative perceptions of NAFTA’s impact.

Recommendation for 

Executive Action

To aid the full and successful implementation of NAFTA, we recommend 

that the Secretary of State, as the head of one of the lead agencies for the 

P4P initiative, work with USDA and other relevant agencies to develop an 

action plan under P4P laying out specific collaborative efforts on rural 

development that would support the successful implementation of NAFTA. 

Such a plan could include a comprehensive strategy that outlines specific 

activities that are intended to address the challenges presented by lagging 

rural development to Mexico’s successful transition to liberalized 

agricultural trade under NAFTA, and sets time frames and performance 

measures for these activities.

To promote rural development in Mexico and enhance Mexican small 

farmers’ ability to benefit from trade opportunities under NAFTA, which 

would also help shape a more positive perception of the agreement, we 

recommend that the Secretary of State, as the lead agency for the P4P 

initiative, work with USDA and other relevant agencies to expand 

collaborative efforts with the Mexican government to facilitate credit 

availability in the countryside. This would include providing Mexico with 

expertise in the area of rural financing, such as risk assessment, project 

management, and loan evaluation.
Page 32 GAO-05-272 International Trade

Agency Comments and 

Our Response

We provided a draft of this report to the Department of State, USDA, USTR, 

USAID, FDA and OPIC for their review. We received formal written 

comments from the Department of State and from USDA, which are 

reprinted in appendixes VI and VII, respectively, along with our responses 

to specific points. In its written comments, the Department of State agreed 

with the need to develop a P4P action plan on rural development, and 

noted that on February 17, 2005, the U.S. and Mexican governments agreed 

to create a new structure under P4P establishing seven permanent working 

groups, including one on rural development. Each of these working groups 

has been asked to develop an action plan for 2005 activities. The 

Department of State also emphasized that the broader goal of P4P is to spur 

economic growth and development in parts of Mexico that have benefited 

less from NAFTA (i.e., not limited to rural development) and noted that the 

P4P initiative must work within existing resources. The Department of 

State raised concerns that the report generally overstates the strength of 

opposition to NAFTA in Mexico. However, we do not believe we have 

overstated the opposition to NAFTA in Mexico. As noted in the report, U.S. 

and Mexican officials expressed concerns about how negative perceptions 

of NAFTA may impact successful implementation of the agreement. In 

addition, the report recalls the difficulties experienced in Mexico in 

anticipation of tariffs elimination under NAFTA in 2003. 

In its letter, USDA expressed readiness to work with the Department of 

State and with other agencies, under P4P, to develop collaborative efforts 

to support Mexican rural development and facilitate the continued and 

successful implementation of NAFTA. The Department of State, USDA, 

USTR, OPIC, and FDA also suggested clarifications, technical corrections, 

and elaboration of certain points which we have incorporated into this 

report, as appropriate. USAID comments were incorporated in the formal 

letter from the Department of State. 

We also obtained comments on key sections of the report from the Mexican 

Ministry of the Economy (SE), the Ministry of Agriculture (SAGARPA), and 

Mexico’s rural lending institution for small and medium farmers 

(Financiera Rural). SE and SAGARPA submitted joint comments. While 

commending the overall positive portrayal of the U.S.–Mexican agricultural 

trade relationship, SE and SAGARPA expressed concern that the report did 

not sufficiently underscore the importance of the Mexican market for U.S. 

exports under NAFTA. They cited U.S. trade data to illustrate the dramatic 

growth in certain U.S. commodity exports to Mexico since NAFTA has been 

in effect. They noted that Mexico is the largest foreign market for U.S. beef 
Page 33 GAO-05-272 International Trade

and rice and the second largest foreign market for U.S. corn, pork, poultry, 

and apples, some of the commodities our report highlights to illustrate the 

effects of Mexican trade measures. 

Additionally, SE and SAGARPA commented that our report did not provide 

a sufficiently detailed objective analysis regarding the nature and validity of 

various Mexican trade measures. These agencies expressed concern that 

the report unfairly portrays various Mexican trade measures without an 

adequate evaluation of the facts behind Mexico’s implementation of these 

measures, such as the scientific support for certain SPS requirements, and 

the legitimate findings of antidumping investigations. SE and SAGARPA 

also objected to the report’s reliance on the testimony of parties directly 

impacted by these measures. Similarly, SE and SAGARPA expressed 

disappointment that the report does not examine U.S. trade measures that 

impact Mexican agricultural exports to the United States, which parallel 

many of the difficulties faced by U.S. agricultural exports to Mexico. 

Finally, SE and SAGARPA also stressed that the debate over the impact of 

NAFTA on the Mexican rural economy does not have any substantive 

implications for the implementation of Mexico’s obligations under the 

agreement. 

GAO fully recognizes, and our report documents, the vital importance of 

the Mexican market for U.S. agricultural exports. We note the rapid growth 

in the value of U.S. agricultural exports to Mexico, which grew on average 

17.4 percent annually and almost doubled from 1993 to 2003. We also point 

out that Mexico is the third largest market for U.S. agricultural exports and 

that its share of the U.S. agricultural export market has risen from 8 

percent in 1993 to about 13 percent in 2003. 

Regarding the concerns raised by SE and SAGARPA about the nature of 

GAO’s analysis, we believe the report presents a balanced and objective 

description of key Mexican trade measures that affect U.S. agricultural 

exports to Mexico. Consistent with GAO’s overarching mission to help 

improve the performance and accountability of U.S. government programs 

and activities, our report provides recommendations to the Department of 

State and USDA to help ensure the successful implementation of NAFTA. 

Since it is outside GAO’s jurisdiction to audit foreign government programs 

and procedures, our treatment of Mexican trade measures is descriptive 

not evaluative. We include testimonial, as well as other evidence, in our 

report in order to illustrate the positions of various parties. Throughout the 

report we have included the views of responsible Mexican officials and 

have added clarifications to the report in response to specific comments 
Page 34 GAO-05-272 International Trade

made by these Mexican agencies. For example, we added language to the 

report to clarify that the existence of a case under dispute settlement 

proceedings does not necessarily mean a trade partner’s actions violate the 

provisions of NAFTA or other trade agreements. Similarly, we eliminated 

references to difficulties related to labeling requirements and import 

permits, which, as USDA officials have acknowledged, have not been used 

frequently by Mexico. Instead we focused only on Mexico’s tax on 

beverages containing nonsugar sweeteners. In addition, our report covered 

a number of areas including collaborative activities of U.S. agencies in 

Mexico and concerns about the long-term success of NAFTA, as well as 

Mexican trade measures that impact U.S. agricultural exports to Mexico. 

While we are aware that Mexican agricultural exports to the United States 

also encounter challenges meeting U.S. import requirements, these issues 

were outside the scope of this project. We have included language 

clarifying the scope of our work in this report. 

Regarding the point raised by SE and SAGARPA on Mexico’s determination 

to proceed with the implementation of NAFTA, our report does not 

question the commitment of Mexican authorities to fulfill their obligations 

under the agreement. However, both U.S. and Mexican officials have 

expressed concerns about how negative perceptions of NAFTA may impact 

successful implementation of the agreement. Some of these officials 

recalled the difficulties experienced at the time of the 2003 tariff 

eliminations, including mass demonstrations against NAFTA, calls for a 

moratorium on implementation of the agreement, and pressure to 

renegotiate the agricultural provisions of NAFTA. We believe that in 

accordance with U.S. government pronouncements regarding the 

importance of NAFTA for U.S. farm interests, it is appropriate for U.S. 

agencies to actively plan to support the successful implementation of the 

agreement. 

In addition to these broader comments on the report’s presentation and 

approach, SE and SAGARPA provided technical comments and 

clarifications on Mexican agricultural programs, such as clarification on 

PROCAMPO payments, and on the crops included under the Direct 

Payments for Target Income subprograms. We have made a number of 

changes in the report to reflect their comments. Financiera Rural had only 

one technical comment on our representation of that agency’s strategic 

plan, which we have incorporated into our report. 
Page 35 GAO-05-272 International Trade

As we agreed with your office, unless you publicly announce the contents 

of this report earlier, we plan no further distribution of it until 30 days from 

the date of this letter. We will then send copies of this report to appropriate 

congressional committees and to the U.S. Trade Representative and the 

Secretaries of the Departments of Agriculture and State. Copies will be 

made available to others upon request. In addition, this report will be 

available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4347 or at yagerl@gao.gov. Other GAO contacts and 

staff acknowledgments are listed in appendix VIII.

Sincerely yours,

Loren Yager

Director International Affairs and Trade
Page 36 GAO-05-272 International Trade

Appendix I

Objective, Scope, and Methodology ApApenednxidexiIs

To obtain information about the progress made, as well as difficulties 

encountered, in gaining market access for U.S. agricultural exports to 

Mexico, we reviewed the commitments in the NAFTA, including the tariff 

elimination schedules for agricultural products. We reviewed official 

documents related to various phases in the implementation of NAFTA and 

met with USDA and USTR officials to document progress made on each 

phase of tariff elimination. We studied trade flows to track changes in U.S. 

agricultural exports to Mexico, both at the aggregate level and at the 

product level using USDA’s Foreign Agricultural Trade of the United States 

database. We discussed the limitations and reliability of the trade data with 

USDA officials and determined the trade data reported by USDA are 

sufficiently reliable for the purpose of this report. We used various price 

indexes to adjust the trade value for inflation to convert trade values to 

constant 2003 dollars. We reviewed USDA publications on the Mexican 

market for U.S. agricultural products, and we reviewed studies by U.S. 

government and academic sources on the impact of NAFTA on U.S. exports 

to Mexico. We met with officials from USTR, USDA, and various producer 

groups to ascertain the progress and the difficulties in market access for 

U.S. agricultural exports to Mexico. We obtained from USTR a list of trade 

disputes with Mexico since NAFTA and reviewed WTO and NAFTA 

documentation on these agricultural trade dispute settlement cases. While 

we describe Mexico’s use of trade measures, we did not evaluate the 

validity of their application. To illustrate the scope and type of market 

access issues faced by U.S. agricultural exports to Mexico, we selected 

seven commodities to analyze and present as case studies. Our analysis and 

criteria for selecting the commodities is presented in appendix II. 

In order to review how Mexico has responded to the challenges and 

opportunities presented by free trade in agriculture and explore remaining 

challenges to the successful implementation of NAFTA, we reviewed 

relevant studies and research prepared by the Mexican Ministry of 

Agriculture (Secretaría de Agricultura, Ganadería, Pesca y Alimentación–

SAGARPA), the World Bank, the United Nations Food and Agriculture 

Organization, and USDA. We conducted an extensive literature search, 

screening the results to identify the most appropriate research and studies. 

We considered various screening criteria including source, timing, and 

venue of publication. We cross checked key conclusions in various studies 

to assess their credibility. We reviewed the methodologies described for the 

studies we report on to determine their limitations. We also interviewed 

several authors of key studies we used in our report to clarify our 

understanding of their methodology and their conclusions. Finally, we 

discussed the conclusions of these studies with other experts including 
Appendix I

Objective, Scope, and Methodology

Page 37 GAO-05-272 International Trade

agricultural researchers and U.S. and Mexican government officials with 

expertise in the area of Mexican agriculture.

We obtained data from SAGARPA and the Mexican National Institute of 

Statistics, Geography, and Information Technology (Instituto Nacional de 

Estadisticas, Geografía, e Informática) on agricultural production. We did 

not assess the reliability of the production data; however, the general trend 

of production is consistent with what is widely reported in other studies. 

We reviewed official Mexican government documents and other studies, 

which describe the major agricultural policies in Mexico since early 1990s. 

We interviewed current and past SAGARPA officials and the officials from 

the Ministry of the Economy (Secretaría de Economía–SE), who are 

familiar with current agricultural programs and the evolution of these 

programs under NAFTA. 

We obtained information from USDA agencies (FAS, APHIS, ERS, NASS, 

ARS, FSIS, and AMS) and from FDA on agriculture-related collaborative 

activities they have undertaken in Mexico for the 10 years that NAFTA has 

been in effect (1994 through 2004). This information included activity 

descriptions and funding by agency. To assess the quality and reliability of 

the data submitted by each agency, we interviewed the agency officials 

responsible for the data and reviewed the data provided. When we noted 

discrepancies or gaps in the data, we discussed these with the agency 

officials and obtained corrections and/or clarifications. Based on our work, 

we determined that the data were sufficiently reliable to portray overall 

levels of expenditures and the nature of these activities. For USDA 

agencies, we compiled this data in a set of tables presented in appendix IV. 

These tables reflect funding for activities implemented by these agencies 

from 1994 through 2004; however, some of the agency activities started 

before 1994, while others were concluded before 2004. For FDA we present 

a summary description of agency activities in the same appendix.

We met with State Department officials in Washington, D.C., and U.S. 

embassy officials in Mexico to discuss U.S. efforts under the Partnership 

for Prosperity (P4P). We reviewed documents from the Department of 

State on P4P including the 2002 and 2003 P4P reports to Presidents Bush 

and Fox, the P4P Action Plan, testimonies by State officials, and press 

releases on P4P activities. In order to report on P4P activities related to 

agriculture or rural development, we discussed agency plans and ongoing 

activities with USDA, U.S. Agency for International Development, and 

Overseas Private Investment Corporation officials. We also discussed the 

impact of P4P with Mexican government officials from SAGARPA, the 
Appendix I

Objective, Scope, and Methodology

Page 38 GAO-05-272 International Trade

Mexican Ministry of the Economy (SE), the Mexican Ministry of Foreign 

Affairs (Secretaría de Relaciones Exteriores), and Mexico’s rural lending 

institution for small and medium size farmers (Financiera Rural). 

We conducted our review from February 2004 through February 2005 in 

accordance with generally accepted government auditing standards.
Page 39 GAO-05-272 International Trade

Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico ApendxiI

To illustrate the range of market access barriers faced by certain U.S. 

agricultural exports to Mexico, we selected seven products to analyze and 

present as case studies: apples, beef, corn, high-fructose corn syrup 

(HFCS), pork, poultry, and rice. Each of the case studies includes a brief 

background and history of the exported product’s experience accessing the 

Mexican market, a description of the types of market access barriers each 

product faces, and a summary of the current status of market access issues. 

We selected commodities as representative of (1) products at various 

stages of the tariff elimination schedule; (2) different agricultural sectors—

for example, grains (rice), horticultural products (apples), and meat (pork); 

(3) products that face varying types of tariff and nontariff barriers; (4) the 

range of mechanisms used in attempting to settle market access disputes; 

and (5) varying levels of export volume and value. Information presented in 

the case studies is based on our analysis of trade data, review of U.S., 

Mexican, WTO, and NAFTA official documents, and interviews with U.S. 

and Mexican government officials and various private sector 

representatives. 

Apples

Background and Trade Data Prior to NAFTA, Mexico restricted access to its fresh apple market through 

import licensing requirements and the application of a 20 percent tariff. In 

1991, Mexico eliminated the licensing requirements. As part of its NAFTA 

commitments, Mexico established TRQs on apples, which were to be 

phased out over a 9-year period and result in duty-free access for U.S. apple 

imports by 2003. USDA reports that U.S. apple exports to Mexico have 

exceeded these specified TRQ amounts in each of the years following 

NAFTA’s implementation. The United States is the world’s leading apple 

producer, and apples comprised the largest portion of fruit exports to 

Mexico in 2003. U.S. apple exports to Mexico accounted for nearly 23 

percent of U.S. worldwide apple exports. Between 1994 and 2003, the total 

quantity of fresh apple exports to Mexico increased by an average of 4.7 

percent annually, and the value of exports totaled nearly $71 million in 2003 

(see fig. 3). 
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 40 GAO-05-272 International Trade

Figure 3: Total Volume of U.S. Fresh Apple Exports to Mexico, 1989–2003

Key Market Access Issues A key market access issue for U.S. apple exporters is the way Mexico has 

sought to exercise oversight for the application of its phytosanitary 

requirements. Mexico requires phytosanitary certificates for U.S. apples 

due to concerns about apple maggots in shipments. According the USDA’s 

Economic Research Service, most countries accept U.S. systems 

approaches for pest management as adequate protection against the threat 

of apple maggot. Mexico, however, requires that apples undergo a process 

called “cold treatment” before U.S. apple shipments can be imported into 

Mexico. Additionally, Mexico required that the Mexican government 

inspect and certify U.S. storage and treatment facilities. The treatment and 

inspection process increased U.S. producers’ cost of exporting apples to 

Mexico. In 1998, Mexico turned over supervision of the inspection program 

to USDA. Nevertheless, according to the U.S. Apple Association, some 

apple-producing states have been effectively shut out of the Mexican apple 

market because of the prohibitive treatment and certification costs. For 

example, the association representative noted that producing states like 

Pennsylvania, the fourth largest apple-producing state in the country, 

cannot recoup the “hundreds of thousands of dollars” of costs incurred 

through these inspections.

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

50

100

150

200

250

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 41 GAO-05-272 International Trade

In addition to Mexico’s phytosanitary treatment and certification 

requirements, Mexico initiated an antidumping investigation against U.S. 

apples in 1997 and imposed a preliminary import duty of more than 100 

percent on Red and Golden Delicious apples. In 1998, the U.S. apple 

industry and the Mexican government signed an agreement suspending this 

duty, and the U.S. industry agreed to comply with a minimum-price 

scheme.1

 U.S. apple exports to Mexico declined in 1998 (when the 

antidumping duty was in place) but experienced large, successive 

increases in 1999, 2000, and 2001 under the price agreement. However, in 

August 2002, the minimum price scheme was dropped at the request of 

Mexican growers, and Mexico resumed the dumping case and imposed 

antidumping duties of more than 45 percent on U.S. apples. As a result, U.S. 

exports decreased in 2002 and 2003. According to the U.S. Apple 

Association, the timing of the Mexican imposition of the dumping duty was 

notable, since NAFTA’s tariff rate quota and duty on apples were to be lifted 

on January 1, 2003. For this reason, the association noted that many U.S. 

apple exporters question the merits of the dumping allegations and 

maintain that Mexico is inappropriately restricting market access in order 

to protect its domestic industry. 

Current Status and Future 

Challenges

U.S. apple industry representatives note that Mexico’s policies restrict U.S. 

producers’ access to Mexico’s market. The U.S. apple industry notes that 

the treatment certification process takes several years and can be 

prohibitively costly in U.S. states where there are fewer producers to share 

costs. Furthermore, the U.S. apple industry is very fragmented, which is a 

significant challenge in dealing with market access problems in Mexico. 

For example, even though producers find the certification process 

burdensome, the industry does not have a joint strategy on how to address 

this problem. 

Beef

Background and Trade Data In 1992, 2 years prior to NAFTA’s implementation, Mexico raised tariffs on 

imported beef from zero to 20 percent. Per NAFTA, Mexico immediately 

eliminated these tariffs on imports of most U.S. beef products, and U.S.

1

Minimum pricing is also referred to as reference pricing. 
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 42 GAO-05-272 International Trade

beef exports to Mexico increased.2 The recession that followed the 1994 

peso crisis caused U.S. beef exports to Mexico to drop sharply by 1995, and 

exports did not recover fully until 1997. U.S. beef exports have grown 

steadily since 1995, and USDA notes that this increase is linked partially to 

the continuing improvements in the Mexican economy. Between 1994 and 

2003, the volume of U.S. beef exports to Mexico increased by an average of 

21 percent annually, and beef exports to Mexico accounted for 22.4 percent 

of the volume of U.S. beef exports worldwide (see fig. 4). The value of 

exports to Mexico in 2003 totaled $604 million. 

Figure 4: Total Volume of U.S. Beef Exports to Mexico, 1989–2003 

Key Market Access Issues Although the volume of U.S. exports to Mexico has been increasing steadily 

over the past 10 years, market access for U.S. producers has been affected 

by antidumping actions and a ban on U.S. beef following the discovery in 

the United States of one cow (originally imported from Canada) with 

bovine spongiform encephalopathy (BSE) or “mad cow disease.” First, in 

1994, the Mexican National Livestock Association initiated an antidumping 

2

Under NAFTA, Mexico also agreed to phase out a 20 percent tariff on U.S. beef offal over a 

9-year period that ended on January 1, 2003. 

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

50

100

150

200

250

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 43 GAO-05-272 International Trade

case against certain types of beef imports by claiming discriminatory 

pricing on the part of U.S. exporters. Following industry-to-industry 

negotiations, the U.S. National Cattlemen’s Beef Association and the 

Mexican National Livestock Association signed a memorandum of 

understanding that formalized an agreement to (1) share U.S. technologies 

with Mexican producers and (2) coordinate both groups’ efforts to promote 

beef consumption in Mexico. As a result, the Mexican National Livestock 

Association dropped the dumping petition. 

However, in 1998 charges were made once again that the United States was 

dumping beef in Mexico. On August 1, 1999, Mexico announced 

antidumping tariffs that varied by company. Individual U.S. beef exporters 

appealed these tariffs, and on October 10, 2000, Mexico published a set of 

revised antidumping tariffs for certain beef exporters. These duties range 

from zero to 80 cents per kilogram, depending on the company and the type 

of beef. On June 16, 2003, the United States requested WTO consultations 

on Mexico’s antidumping measures on rice and beef, as well as certain 

provisions of Mexico’s Foreign Trade Act and its Federal Code of Civil 

Procedure.3

 In addition, a NAFTA Chapter 19 panel is expected to rule 

shortly on whether these duties were applied in accordance with Mexican 

law.

According to the National Cattlemen’s Beef Association, the root of the 

beef trade dispute in Mexico lies in the lack of differentiation between the 

values for various cuts of meat. In Mexico, the different cuts of beef 

generally all have the same value, whereas in the United States different 

cuts of beef have different values. These different values have led to 

antidumping cases against the United States because any commodity that 

sells for less than the value of the product in the home country is 

considered dumping. According to the National Cattlemen’s Beef 

Association representative, demand for variety meats (such as tripe and 

liver) is significantly higher in Mexico than it is in the United States. 

Because of these demand conditions, U.S. exporters can sell variety meats 

at a lower price, which leads Mexico’s industry to believe the United States 

is dumping these products on the Mexican market. 

In addition to facing dumping duties, the detection of one case of BSE in 

the United States in December 2003 led Mexico to impose a ban on all U.S. 

beef products. In March 2004, Mexico was the first country to reopen its 

3

WTO Case DS/295.
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 44 GAO-05-272 International Trade

market to certain types of U.S. beef products (U.S. boxed beef under 30 

months of age), expanding the list of allowable beef products in April 2004, 

and USTR reports that the U.S. government is working to re-open the 

remainder of the market as soon as possible. 

Current Status and Future 

Challenges

According to producer group officials, market access for U.S. beef exports 

to Mexico has generally been very good, as evidenced by overall increases 

in trade. Both U.S. and Mexican industries plan to continue working 

together to resolve any potential trade disputes through industry 

negotiations. USTR notes that U.S. and Mexican beef and cattle industries 

are increasingly integrated, with benefits to producers, processors, and 

consumers in both countries. 

Corn

Background and Trade Data Corn is an important commodity in Mexico; in addition to being a dietary 

staple, white corn is the principal crop for many Mexican small farmers, 

and historically corn production is a fundamental feature of Mexican rural 

culture. Consequently, NAFTA negotiations regarding the phase-out of 

import barriers for corn were particularly sensitive. Prior to NAFTA, 

Mexico restricted access to its corn market through import licensing 

requirements, and there was no guaranteed level of access for U.S. imports. 

During NAFTA negotiations, it was widely believed in Mexico that 

immediate increases in imports of U.S. corn would displace Mexican corn 

producers. As a result, NAFTA negotiators agreed to allow Mexico to 

replace its import licensing requirements with transitional TRQs that will 

be phased out over a 14-year period—the longest transition period set forth 

in the agreement. 

The United States has been one of the major foreign suppliers of yellow 

(feed) corn to Mexico, and U.S. exports to Mexico comprised 13 percent of 

all U.S. corn exports worldwide in 2003. Between 1994 and 2003, the 

volume of U.S. corn exports to Mexico increased by an average of 18.5 

percent annually (see fig. 5). The value of exports to Mexico in 2003 totaled 

$651 million. 
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 45 GAO-05-272 International Trade

Figure 5: Total Volume of U.S. Corn Exports to Mexico, 1989–2003

Key Market Access Issues Although Mexico’s removal of restrictive import licensing requirements did 

away with a significant barrier to U.S. access to Mexico’s corn market, a 

number of other factors have affected U.S. exports before and after 

NAFTA’s implementation. For example, in the early 1990’s, Mexico lifted a 

ban on using corn to feed livestock, which immediately increased demand 

for imports of yellow corn from the United States, which had been 

declining for several years. In 2003, yellow feed corn exports comprised 

more than 80 percent of U.S. corn exports to Mexico. Additionally, in the 

years following NAFTA, Mexico has usually allowed higher levels of 

imports than are required under the NAFTA TRQs in order to ensure that 

domestic demand for corn is fully met. Thus, Mexico has generally applied 

much lower tariffs on these additional quantities than those set forth under 

the agreement.4

 These more liberal market access policies for yellow (feed) 

corn imports are driven in part by a need to provide feed for Mexico’s 

expanding livestock industries. Notwithstanding these policies toward feed 

corn imports, a USDA analysis of Mexico’s corn market notes that imports 

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

4

For example, in 2003, Mexico’s applied tariff rate on imports of U.S. yellow corn that 

exceeded the NAFTA TRQ levels was less than 2 percent, while the out-of-quota tariff rate 

specified under NAFTA was more than 70 percent.
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 46 GAO-05-272 International Trade

of white corn (i.e., corn generally used directly for human consumption) 

from the United States have declined since 2000, partly because the 

Mexican government has provided marketing funds to domestic producers 

of white corn. Additionally, USDA reports that in a significant departure 

from past practice, Mexico levied the NAFTA-specified above quota tariff 

rate of 72.6 percent on white corn in 2004. Mexico’s tax on beverages 

sweetened with HFCS has also contributed to the decline in U.S. corn 

exports to Mexico. The tax has depressed Mexican production of HFCS, 

which is made from imported corn.

Current Status and Future 

Challenges

U.S. exports of corn to Mexico are expected to increase significantly as 

Mexico eliminates the transitional TRQs in 2008. However, some industry 

groups noted concern about Mexico taking other steps to protect its 

sensitive domestic corn market. For example, one U.S. industry 

representative noted that it will be important for the U.S. government to 

ensure that Mexico does not use SPS requirements as a barrier to U.S. 

imports. On the other hand, other observers note that an expanding 

economy in Mexico will increase consumer demand for meat and, in turn, 

continue to increase demand for U.S. corn imports as feed for Mexican 

livestock production.

Additionally, certain farm groups in Mexico have argued that allowing dutyfree imports of U.S. corn will lead to a total collapse of Mexican 

agriculture, and they have vowed to mount an unprecedented campaign to 

stop the last round of tariff eliminations. Mexican politicians who oppose 

NAFTA note the continuing economic distress in rural areas of Mexico and 

insist on renegotiating the agricultural provisions of the agreement to 

improve the conditions of Mexican farmers. Although the total elimination 

of already low Mexican tariffs on corn may not have much economic 

significance for U.S. producers, failure to comply with the final phase of 

tariff elimination may undercut support for NAFTA among U.S. producers 

who were in favor of the agreement with the expectation that it would lead 

to genuinely free trade. Furthermore, U.S. trade officials have expressed 

serious reservations about any attempt to renegotiate the agricultural 

provisions of NAFTA because it could lead to demands to renegotiate other 

aspects of the agreement and undermine the agreement as a model for 

trade liberalization throughout the Western Hemisphere.
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 47 GAO-05-272 International Trade

High-Fructose Corn Syrup

Background and Trade Data Impediments confronted by U.S. HFCS exports to Mexico are related to 

difficulties encountered by Mexican cane sugar exports to the United 

States. Trade friction between the United States and Mexico over HFCS 

came to a head in 1997, when Mexico initiated an antidumping 

investigation of U.S. exports of this product. Based on the results of this 

investigation, Mexico imposed antidumping duties beginning in 1998. This 

triggered a lengthy WTO dispute settlement proceeding, in which the 

United States eventually prevailed in 2001. Thereafter, Mexico eliminated 

its antidumping duties but imposed a tax on beverages made with any 

sweetener other than cane sugar, including HFCS. The United States has 

challenged Mexico’s beverage tax in the WTO, and that dispute is still 

pending.5

 Mexico defends its beverage tax, noting that the United States 

has not complied with its market access commitments with respect to 

Mexican cane sugar. However, the U.S. government has rejected Mexico’s 

arguments linking these two issues.

As shown in figure 6, U.S. exports of HFCS began to decline in 1999 after 

Mexico imposed the antidumping duties, and dropped to nearly zero after 

Mexico imposed the beverage tax in 2002.

5

WTO Case DS/308.
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 48 GAO-05-272 International Trade

Figure 6: Total Volume of U.S. Fructose Syrup Exports to Mexico, 1989–2003

Note: This graph is for syrup containing more than 50 percent by weight of fructose (HS 1702600050).

Key Market Access Issues Market access issues began in 1997 when Mexico imposed preliminary 

antidumping duties on U.S. exports of HFCS. In 1997, Mexico’s National 

Chamber of Sugar and Alcohol Industries, the association of Mexico’s sugar 

producers, filed a petition in which it claimed that U.S. HFCS was being 

sold in Mexico at less than fair value and that these imports constituted a 

threat of material injury to Mexico’s sugar industry. As a result of these 

claims, the Mexican Ministry of the Economy responded by imposing 

antidumping duties on U.S. HFCS. In 1998, USTR invoked a WTO dispute 

proceeding to challenge Mexico’s action, and in 2000, a WTO panel ruled 

that Mexico’s imposition of antidumping duties on U.S. imports of HFCS 

was inconsistent with the requirements of the WTO Antidumping 

Agreement.6

 At that time, Mexico agreed to implement the panel 

recommendation by September 22, 2000. However, on September 20, 2000, 

Mexico issued a new determination and concluded that there was a threat 

of material injury to the Mexican sugar industry and that it would maintain 

the antidumping duties. 

Metric tons in thousands

Source: GAO, based on the U.S. International Trade Commission DataWeb.

0

50,000

100,000

150,000

200,000

250,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

6

WTO Cases DS/101 and DS/132.
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 49 GAO-05-272 International Trade

The United States maintained that Mexico’s new determination did not 

conform to the WTO panel’s recommendations and challenged this new 

determination before a WTO compliance panel. The WTO compliance 

panel agreed with the U.S. position. Mexico appealed this ruling. The WTO 

Appellate Body agreed with the compliance panel’s conclusions and 

recommended that Mexico comply with its obligations under the WTO 

Antidumping Agreement. While Mexico revoked its antidumping duties on 

HFCS in April 2002, in January of that year the Mexican Congress imposed 

a 20 percent tax on soft drinks and other beverages that use any sweetener 

other than cane sugar, which effectively shut out U.S. HFCS from the 

Mexican market.

The Fox administration acted to suspend the beverage tax from March 6 

through September 2002. Mexico’s Supreme Court, however, ruled the 

suspension to be unconstitutional and reinstated the tax effective July 16, 

2002. The United States argues the HFCS beverage tax is inconsistent with 

Mexico’s obligations under the WTO, which calls for treating imported 

products no less favorably than comparable domestic products. The United 

States considers that the beverage tax is inconsistent because it applies to 

beverages sweetened with imported HFCS, but not to products sweetened 

with Mexican cane sugar. In June 2004, the United States challenged 

Mexico’s beverage tax in the WTO.

Current Status and Future 

Challenges

The dispute over Mexico’s beverage tax is pending before a WTO panel. 

The sugar industry would like to negotiate a resolution to the sweetener 

dispute. At this time, private meetings have taken place between sugar 

producer groups in the United States and Mexico, and the industries are 

working to reach a resolution before 2008.

Pork

Background and Trade Data Prior to 1994, Mexico levied a duty of 20 percent on U.S. pork, but under 

NAFTA, Mexico agreed to establish TRQs to be phased out over a 9-year 

period that ended on January 1, 2003. For several categories of pork 

products, U.S. pork exports to Mexico greatly exceed the quantitative 

limits of the TRQs, and Mexico generally allowed the additional product to
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 50 GAO-05-272 International Trade

enter without applying the over-quota tariff. 7 Additionally, NAFTA 

permitted Mexico to establish a special agricultural safeguard tariff rate 

quota for certain cuts of pork, under which Mexico can apply higher tariffs 

if imports of that product exceed specified levels.8

 If imports rise above 

that level, the duty reverts to the lower of the current Most Favored Nation 

or pre-NAFTA levels. The safeguard levels expanded 3 percent each year 

until the provision expired on January 1, 2003. 

U.S. pork exports to Mexico have increased significantly since NAFTA, 

with the total volume of U.S. exports rising by an average of 18.5 percent 

annually between 1994 and 2003 (see fig. 7). Exports to Mexico accounted 

for 22.3 of U.S. pork exports worldwide, and U.S. exports to Mexico totaled 

about $217 million in 2003. 

Figure 7: Total Volume of U.S. Pork Exports to Mexico, 1989–2003

7

Under NAFTA, over-quota trade of pork faced a tariff of 10 to 20 percent in 2002.

8

Safeguard was placed on fresh/chilled/frozen pork and hams.

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

30

60

90

120

150

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 51 GAO-05-272 International Trade

Key Market Access Issues In November 2002, Mexican producers submitted a dumping complaint to 

the Mexican government, alleging that U.S. exporters were engaging in 

price discrimination by selling pork to Mexican buyers at lower prices than 

they would sell to buyers in other countries. On January 7, 2003, Mexico 

initiated the antidumping investigation against U.S. pork. According to U.S. 

pork producers, the Mexican association that requested the investigation 

does not represent the Mexican pork industry, and, therefore, did not have 

a legal right to make the request. The producers of pork in Mexico—the 

slaughterhouses and the packers—stated that they do not want the 

investigation to proceed and asked that it be terminated. On May 28, 2004, 

the Mexican government terminated the January 2003 investigation and 

initiated a more limited antidumping investigation on hams only.

Even after the antidumping case was filed against U.S. pork, Mexico 

continued to be the second major market for U.S. pork exports. 

Furthermore, USDA officials stated that any decreases in pork exports due 

to the case were more than offset by the increase in demand for pork 

following Mexico’s ban on U.S. beef products after a case of BSE was 

discovered in the United States. In addition, USDA noted that demand for 

U.S. pork exports to Mexico correlates closely to income growth in that 

country (i.e., the rise of the middle class). Thus, while Mexico’s tariff 

reductions have been an important contributing factor to the growth of U.S. 

pork exports to Mexico, the far more significant drivers of export growth 

have been the rapid recovery of the Mexican economy following its 

recession in 1995 and continuing income and economic growth since then. 

Current Status and Future 

Challenges

The U.S. government has questioned the basis of the May 2004 ham 

antidumping investigation. Furthermore, USTR asserts that the United 

States is actively working to prevent potential actions that Mexico may 

take on exports of U.S. pork. USTR officials believe that Mexico’s January 

2003 initiation of a pork dumping investigation and a May 2004 initiation of 

a ham dumping investigation may violate WTO rules and questions the 

statistics being used by the Mexican government to determine the level of 

imports. USTR has engaged the Mexican government to terminate the hamdumping investigation, to resolve differences on trade statistics, and to 

seek alternatives to trade restrictive measures. Despite the antidumping 

dispute, Mexico and the United States have pledged to build on their long 

history of cooperation regarding swine and pork bilateral trade on the basis 

of equal and mutual benefit. 
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 52 GAO-05-272 International Trade

Poultry 

Background and Trade Data Prior to NAFTA, Mexico restricted access to its poultry market through 

import licensing requirements and 10 percent tariffs on imports. As with 

other products subject to import licensing, Mexico replaced these barriers 

with TRQs as part of its NAFTA commitments. NAFTA called for the TRQs 

to be phased out over a 9-year period, with duty-free access for U.S. poultry 

by 2003. Per NAFTA, the larger portion of the tariff cuts was to be 

implemented in the latter half of the phase-out period—a process referred 

to as “backloading.” Mechanically deboned meat, which is used by Mexican 

sausage manufacturers, comprises the most significant portion of U.S. 

poultry exports to Mexico. Since NAFTA, the Mexican government has 

chosen not to impose the above-quota tariff on this commodity due to the 

Mexican sausage industry’s high demand for the product, and, as a result, 

U.S. exports have routinely exceeded the TRQ levels set forth in the 

agreement. Between 1994 and 2003, imports of U.S. dark meat chicken 

parts have also generally exceeded the transitional TRQ levels. The United 

States is the major foreign poultry supplier to Mexico’s market, and Mexico 

is typically among the top three markets worldwide for U.S. poultry 

exports. From 1994 to 2003, the volume of U.S. poultry meat exports to 

Mexico increased by an average of 5.7 percent annually (see fig. 8). U.S. 

exports to Mexico accounted for 11.4 percent of U.S poultry meat exports 

worldwide, and the value of U.S. poultry exports to Mexico totaled about 

$260 million in 2003. 
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 53 GAO-05-272 International Trade

Figure 8: Total Volume of U.S. Poultry Meat Exports to Mexico, 1989–2003

Key Market Access Issues Demand for certain U.S. poultry products in Mexico was driven, in part, by 

insufficient domestic poultry production in Mexico. Additionally, because 

U.S. domestic demand for dark meat is low relative to Mexico’s consumer 

demand, U.S. producers have been able to keep dark poultry meat prices 

relatively low and thus attractive to Mexican buyers. Over the years since 

NAFTA’s implementation, Mexico’s domestic poultry industry has 

expanded, and concern about U.S. competition among Mexican producers 

has increased commensurately. 

As the end of Mexico’s transitional TRQ on poultry products drew near in 

2002, the Mexican poultry industry petitioned the Mexican government to 

apply a safeguard on imports of U.S. chicken leg quarters. The petitioners 

argued that the end of the TRQ would result in an import surge from the 

United States and injury to Mexico’s domestic industry. Article 703 of 

NAFTA would have permitted Mexico to impose duties of up to 240 percent 

on U.S. poultry imports, if NAFTA’s conditions for a safeguard were met. 

Rather than face such potentially high tariffs and a disruption to U.S. 

exports, U.S. producers, in industry-to-industry negotiations with the 

Mexican petitioners, agreed to a more favorable regime. 

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

50

100

150

200

250

300

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 54 GAO-05-272 International Trade

In July 2003, Mexico issued a final safeguard determination that imposed a 

TRQ which allows the quota to expand each calendar year through 2007, at 

which point the duties will be eliminated. The within-quota duty is zero, 

and the initial over-quota duty was 98.8 percent, which declines each year 

until reaching zero on January 1, 2008. The U.S. and Mexican governments 

agreed on a package of compensation measures in response to the 

safeguard. In particular, Mexico agreed not to impose any other restrictions 

on U.S. poultry products and to eliminate certain SPS restrictions. The U.S. 

government also agreed, following consultations with U.S. industry, to 

consent to Mexico’s application of the safeguard past the expiration of the 

transition period. 

Some poultry industry representatives noted that settlement of the poultry 

safeguard issue brought some initial criticism from other U.S. producer 

groups, who maintained that the settlement set a precedent for Mexico to 

force renegotiation of its NAFTA commitments. However, USTR officials 

stated that the United States will not consider any renegotiation or 

rescission of Mexico’s NAFTA commitments and views the poultry 

settlement as a unique workable solution that forestalled possible 

significant disruption to U.S. exports. They doubted a similar outcome 

could be achieved in other industries. 

Current Status and Future 

Challenges

USDA reports that domestic poultry production in Mexico continues to 

expand. USDA and industry representatives said that the additional 

protection for Mexican producers established under the safeguard 

settlement will provide Mexican producers additional time to prepare for 

free trade. USDA also notes that demand for poultry, combined with an 

expanding Mexican economy and a removal of the ban on some U.S. 

poultry exports, will continue to increase demand for U.S. poultry 

products. Nevertheless, some U.S. industry representatives remain 

concerned and noted that once the TRQ expires, Mexican authorities may 

employ other measures, such as sanitary restrictions, as a means to 

constrain U.S. access to Mexico’s market. 

Rice

Background and Trade Data The United States is the primary supplier of rice to Mexico, mostly due to 

the fact that Mexico has banned or placed strict phytosanitary standards on
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 55 GAO-05-272 International Trade

imports of rice from Asian countries since the early 1990s.9 The United 

States exports both rough (i.e., unprocessed) rice and milled (i.e., 

processed) rice to Mexico, although demand for rough rice is much higher. 

As a result of the lack of supply from Asian producers and the high demand 

for rough rice, rough rice accounted for about 90 percent of the total 

volume of U.S. rice exports to Mexico in 2003. Prior to NAFTA’s 

implementation, Mexico levied duties of 20 percent on brown and milled 

(i.e., processed) rice and 10 percent on rough (unprocessed) rice. Under 

NAFTA, Mexico agreed to phase out rice tariffs over a 9-year period, with 

all tariffs to be eliminated by 2003. With the phasing out of tariffs on rice, 

the volume of U.S. exports has increased by an average of 14.4 percent 

annually from 1994 to 2003 (see fig. 9). U.S. rice exports to Mexico 

accounted for 17.7 percent of U.S. rice exports worldwide, and exports to 

Mexico totaled about $140 million in 2003. 

Figure 9: Total Volume of U.S. Rice Exports to Mexico, 1989–2003

9

Due to an infestation believed to have originated from Asian rice shipments, Mexico 

banned all rice imports from Asian countries in 1993. Mexico removed the ban in 1996, but 

still subjects Asian rice to strict phytosanitary requirements. Additionally, no major Asian 

rice producer allows exports of rough, unmilled rice because rice milling is a value-added 

process and source of employment in those countries.

Metric tons in thousands

Source: GAO, based on USDA Foreign Agricultural Trade of the United States database.

0

100

200

300

400

500

600

700

800

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year
Appendix II

Case Studies of Selected U.S. Agricultural 

Exports to Mexico

Page 56 GAO-05-272 International Trade

Key Market Access Issues In December 2000, Mexico initiated an antidumping investigation on 

imports of long-grain milled rice from the United States. Mexican rice 

millers (who process rice that competes with U.S. milled rice imports) 

alleged that U.S. milled rice is being sold in Mexico at a prices less that its 

fair market value. The Mexican government subsequently levied 

antidumping duties in April 2000 and June 2002 on specific U.S. rice 

imports. A U.S. rice industry representative told us that the U.S. rice 

industry attempted to resolve the issue through the industry-to-industry 

negotiations but that the negotiations were unsuccessful. Following the 

industry negotiations, the United States formally requested WTO 

consultations with Mexico in June 2003. These consultations were held 

from July 31 through August 1, 2003, on the basis of concerns regarding 

Mexico’s methodology for determining injury to the domestic market and 

for calculating dumping margins. WTO consultations failed to resolve the 

issue, and in February 2004 a WTO dispute panel was formed to resolve the 

case.10 The U.S. rice industry representative said that several other U.S. 

commodity groups were supporting this case in the WTO because the case 

deals with broad issues related to Mexico’s application of the antidumping 

law that could affect their exports as well. 

Current Status and Future 

Challenges

A ruling on the WTO dispute is expected in April 2005. Notwithstanding the 

outcome of the case, U.S. rice exporters generally benefit from preferential 

access under NAFTA and Asian exporters’ restricted access to the Mexican 

market. USDA reports indicate that U.S. exporters could face increased 

competition in the milled rice market in Mexico should Asian exporters 

satisfactorily meet Mexico’s phytosanitary concerns.

10WTO Case DS/295.
Page 57 GAO-05-272 International Trade

Appendix III

Three Major Mexican Agricultural Programs ApendxiI

Recognizing the challenges and anticipating the opportunities that market 

reforms and free trade posed for its farm sector, the Mexican government 

has implemented several programs to help its farmers adjust to changing 

economic conditions. The three main support programs implemented since 

the early 1990s are PROCAMPO, marketing support, and Alianza.

PROCAMPO (Programa de Apoyos Directos al Campo)

• Date initiated: 1994

• Budget: PROCAMPO is the largest agricultural support program, 

accounting for 35 percent of Mexico’s Agriculture Ministry’s (SAGARPA) 

budget in 2003, around $1.27 billion. 

• Goal: PROCAMPO is a 15-year program that provides transitional 

income support to Mexican agriculture as it undergoes structural 

changes in response to market conditions and the phasing out of trade 

barriers under NAFTA. The political objective is to manage the 

acceptability of the free trade agreement among farmers and to prevent 

extensive levels of poverty and out-migration.

• How it operates: The program makes payments on a per-hectare basis to 

any producer who cultivates a licit crop on eligible land or utilizes that 

land for livestock or forestry production or some ecological project. 

Eligible land is defined as that which has been cultivated with corn, 

sorghum, beans, wheat, barley, cotton, safflower, soybeans, or rice in 

any of the three agricultural cycles before August 1993. There are three 

types of PROCAMPO payments: preferential, traditional, and 

capitalized. Preferential payment is for producers with fewer than 5 

hectares in nonirrigated lands who only produce in the spring-summer 

cycle. For the spring-summer 2003 agricultural cycle, the payment levels 

equaled 1,050 Mexican pesos ($100) per hectare. The traditional 

payment is for the rest of the producers. It was 905 pesos ($86) per 

hectare in 2003. The capitalized payment is made under certain 

conditions to producers who request the sum of their future 

PROCAMPO payments.

• Beneficiaries: During 2001, 2.7 million producers with a total of 13.4 

million hectares received PROCAMPO payments. Around 75 percent of 

farmers in the PROCAMPO database have less than 5 hectares of land. 
Appendix III

Three Major Mexican Agricultural Programs

Page 58 GAO-05-272 International Trade

• Changes in the program: There was a proposal in November 2002, as 

part of a broader Mexican government initiative for rural support, to 

update the payments according to yields. However, this action was 

never put into practice. Another program will be created for producers 

who are not currently registered in PROCAMPO, who also may be 

considered for assistance to smooth out income fluctuations. Also, the 

National Agreement’s emergency spending proposal contains 650 

million pesos ($62 million) for the inclusion of additional land on the 

PROCAMPO roster.1

 According to Mexican officials, even where there 

are new producers enrolling, the total benefiting area has not changed 

because those new producers are filling the place left by former 

producers whose lands are no longer eligible to receive support.

• Impact: PROCAMPO has become an important source of some rural 

households’ income, and it may have income multiplier effects when 

recipients put the money they receive to work to generate further 

income. The Mexican government reported that between 1989 and 2002 

incomes from agricultural businesses have lost importance, while other 

sources, such as government support programs, remittances, salaries, 

and wages, have increased their share in rural households’ income. 

Scholars have found payment from PROCAMPO has forestalled the 

income decline of subsistence farmers. In addition, scholars found that 

payment from PROCAMPO generated an income multiplier effect, 

which meant that the PROCAMPO payment was used productively and 

generated additional income for rural households. However, scholars 

believe that the level of payment from PROCAMPO was not large 

enough to offset the risks of switching to more profitable crops, which is 

part of the goals of the marketing support program (discussed below).

Marketing Support and Regional Market Development Program (Programa 

de Apoyos Directos al Productor por Excedentes de Comercialización para 

Reconversión Productiva, Integración de Cadenas Agroalimentarias y 

Atención a Factores Críticos, formerly Programa de Apoyos a la 

Comercialización y Desarrollo de Mercados Regionales) 

1

The Mexican government invited producer groups and other rural organizations to 

participate in nearly 4 months of public hearings and negotiations. The government and 

many of the participating organizations signed the National Agreement for the Countryside 

(Acuerdo Nacional para el Campo) in 2003. The document includes a plan to reallocate 

more than 18.8 billion pesos ($1.8 billion) in government funds to a variety of emergency 

activities. 
Appendix III

Three Major Mexican Agricultural Programs

Page 59 GAO-05-272 International Trade

• Date Initiated: 1991

• Budget: The marketing support program is the second largest 

agricultural program. Marketing Support and Regional Market 

Development Program accounts for about 16 percent of SAGARPA’s 

budget. For 2003, the budget was around $580 million.

• Goal: The program supports various aspects of agro-marketing and 

commerce. The Agricultural Marketing Board (ASERCA) was created to 

substitute the traditional direct intervention that the government 

formerly made through a parastatal state trading enterprise for sorghum 

and wheat. 

• How it operates: The program has seven subprograms: (1) direct 

payment to producers, (2) price supports, (3) collateral loans, (4) crop 

conversion, (5) other types of support, (6) slaughter house certification, 

and (7) special support for corn. The major subprogram is the direct 

payment to producers. This program provides payments to producers of 

rice, corn, wheat, sorghum, barley, canola, copra, peanuts, cotton, and 

safflower in certain areas, usually on a per-ton basis. 

• Beneficiaries: Beneficiaries of the marketing support program on 

average have more land than PROCAMPO payment recipients. 

According to Mexican government documents, around 22 percent of the 

respondents to its annual survey of the marketing support program have 

fewer than 5 hectares, while almost half have more than 15 hectares. In 

2004, the program supported 240,000 producers.

• Changes in the program: In 2003, Mexican farmers asked for support 

that would “mirror” what was provided U.S. farmers under the U.S. 

Farm Bill, which led the Mexican government to establish “target 

income” support. The new program has seven subprograms including 

direct payments for (1) target income, (2) slaughtering in certified 

slaughter houses, (3) accessing domestic forages, (4) crop conversion, 

(5) price hedging, (6) pledging, and (7) other specified activities. 

Additionally, barley, copra, and peanuts are no longer on support list. 

For a period of 5 years, the government plans to guarantee a target 

income, expressed per ton, for producers of certain grains and oilseeds. 

Nearly 17 billion Mexican pesos ($1.6 billion) have been designated for 

this program. In determining whether a producer has reached the target 

income, the government evaluates a producer’s income from selling on 

the market, and if the income from selling on the market falls short of 
Appendix III

Three Major Mexican Agricultural Programs

Page 60 GAO-05-272 International Trade

the target income, the government will provide additional support to 

ensure that farmers’ incomes reach the set target. Under the former 

program, just a few states were able to request support, while the new 

program makes payments to producers with commercial surpluses in all 

states. 

• Impact: The program has had an impact on crop patterns and migration. 

The “target price” program has led to concentration in basic crop 

production instead of crop diversification. Mexican officials hope the 

new “target income” approach will help farmers to be more responsive 

to the market conditions. A Mexican official document points out that 

the program is an important factor in mitigating migration from the 

countryside, but the document also recognizes that the program did not 

succeed in integrating farmers into the marketing chain. Thirty percent 

of the respondents to the program annual survey said they would have 

sought employment somewhere else if they had not received this 

assistance. A USDA study of grain production finds that the marketing 

supports, along with the constitutional reforms that allow the rental of 

ejidal lands, have facilitated the emergence of large-scale farms of corn 

and dried beans.

Alianza (Alianza para el Campo)

• Date initiated: 1996

• Budget: Alianza accounts for about 15 percent of SAGARPA’s budget, 

about $570 million in 2003. 

• Goal: The goals of the programs are to boost agricultural productivity 

and promote the transition to higher value crops. The objectives include 

increasing producer income, improving the balance of trade, achieving 

an agricultural production growth rate higher than the population 

growth rate, and supporting the overall development of rural 

communities.

• How it operates: The programs were grouped under four categories: 

agriculture, livestock, phytosanitary, and technology transfers. Activities 

include better use of water and fertilizer, adoption of improved seeds, 

better disease and pest control practices, improved genetic quality of 

crops and livestock, improved cattle stocks, better health and sanitation 

practices, and pasture development and related infrastructure 

development for increased production. These programs are 
Appendix III

Three Major Mexican Agricultural Programs

Page 61 GAO-05-272 International Trade

decentralized and are financed jointly by federal and state governments 

and producers.

• Beneficiaries: The evaluation done by the United Nations Food and 

Agriculture Organization (FAO) found that the program serves farmers 

with various socio-economic backgrounds, educational levels, ages, 

farm size, and income levels. The FAO evaluation also found that 

medium size producers have benefited the most from the agriculture 

program, and 24 percent of small farmers have benefited. 

• Changes: In 2002, for the first time, general objectives were established 

for all the sub programs. These objectives are to (1) increase income, (2) 

diversify employment options, (3) increase investment in rural 

development, (4) strengthen producer group organizations, and (5) 

advance sanitary standards. To achieve these objectives, strategies were 

established to integrate standards, bring together regional producer 

groups, and discuss important issues such as land and water use. Also in 

2002, there was recognition by the government of a need to transfer 

technology and investment to the rural sector.

• Impact: The FAO evaluation pointed out some benefits from Alianza. 

For example, technology helped certain areas get access to water. 

Alianza also created a forum to consolidate processes of participation 

and implementation of different policies for the agricultural sector, 

allowing the participation of the state and producers in the 

conversation. The same evaluation pointed out that the additional 

employment generated from the program was modest. 
Page 62 GAO-05-272 International Trade

Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004) ApendxiIV

While U.S. development assistance to Mexico has been limited, U.S. 

agencies have undertaken numerous collaborative efforts that benefit both 

U.S. and Mexican agricultural interests. Most of these efforts have been led 

by the United States Department of Agriculture (USDA), in conjunction 

with its Mexican counterparts, in support of overall agricultural production 

and trade objectives. USDA’s Foreign Agricultural Service officials noted 

that historically USDA has had a very strong collaborative relationship with 

Mexico’s Ministry of Agriculture. USDA’s Animal and Plant Health 

Inspection Service (APHIS) has invested more funds in collaborative 

efforts with Mexico than of any USDA agency, about $280 million, since 

NAFTA was implemented. Besides APHIS’s collaborative activities, six 

other USDA agencies—the Economic Research Service (ERS), the 

Agricultural Research Service (ARS), the Foreign Agricultural 

Service/International Cooperation and Development (FAS/ICD), the 

Agricultural Marketing Service (AMS), the Food Safety and Inspection 

Service (FSIS) and the National Agricultural Statistics Service (NASS)—

have participated in agricultural collaborative projects in Mexico. However, 

funding for collaborative activities in Mexico from these agencies has been 

very modest, about $7.5 million combined over the past 10 years. In 

addition to collaborative efforts implemented by USDA agencies, the Food 

and Drug Administration (FDA) has also had a role in activities that benefit 

Mexican agriculture.

Animal and Plant Health 

Inspection Service (APHIS)

In the course of fulfilling its responsibilities of protecting and promoting 

U.S. agricultural health, APHIS has collaborated with Mexico for over 50 

years (see table 3). APHIS has also implemented programs that facilitate 

agricultural trade from Mexico, such as its preclearance programs. 

Furthermore, APHIS has been by far the U.S. agency that has invested the 

most money in agricultural collaborative efforts with Mexico, the bulk of it 

on its Medfly and Screwworm eradication programs. APHIS reported 

spending a total of about $286 million on its plant and animal health 

activities in Mexico since the implementation of NAFTA.
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 63 GAO-05-272 International Trade

Table 3: Animal and Plant Health Inspection Service (APHIS) Assistance and/or Collaborative Activities in Mexico, 1994–2004

Activity/Program 

type Description of activity Time frame 

Budget 

1994–2004

Plant health Medfly: A cooperative program between the USDA and the governments of 

Mexico, Guatemala, and Belize on the Medfly (Moscamed in Spanish) program 

to eradicate and control the Mediterranean fly, which would cause $2 billion in 

losses if established in the United States. Moscamed’s current top priorities are 

to eradicate the Medfly from Chiapas, Mexico, and move the barrier south into 

Guatemala in an effort to eradicate the Medfly from Central America and 

establish a sustainable Medfly barrier at the Darien Gap in Panama, thus 

providing more secure prevention against a Medfly infestation of the United 

States. To achieve this goal Moscamed is using a two-stage strategy. First, 

Moscamed sprays Spinosid, a newly developed organic bait spray. The second 

phase is the sterile insect technique in which flies are produced at a facility and 

then sterilized. Male flies are then released and compete with wild male flies. 

Because the sterilized flies are unable to reproduce, the population drops 

dramatically without continuous pesticide use. 

Program 

began in 

Mexico in 

1977 

$113 million 

(estimate)

Plant health Mexfly: This program maintains Mexican fruit fly detection programs in 

northern Mexico and Baja California, controls outbreaks along the border in 

coordination with Mexico’s Plant Health agency (Sanidad Vegetal) and 

provides year-round aerial releases of sterile flies. A new center is planned to 

coordinate sterile fly releases in northern Tamaulipas along the border U.S.–

Mexican border.

1969 $8.1 million 

(estimate)

Plant health Pink Bollworm/Boll Weevil: The goal of this program is eradication of the boll 

weevil and pink boll worm from the northern, cotton-producing areas of Mexico 

and maintenance of an effective detection and control program in the Juarez 

Valley, the Ascension area, and Meoqui Chihuahua.

1986 $1.6 million 

(estimate)

Plant health Hydrilla: This program works to progressively eradicate the noxious weed 

Hydrilla from irrigation systems in the Mexicali Valley using mechanical 

extraction and sterile triploid grass carp.

1985 $593,000 

(estimate)

Plant health Mexican Mango Preclearance Program: APHIS requires that Mexican 

mangoes be treated before entering the United States. APHIS personnel in 

Mexico supervise each treatment. Approximately 38 million boxes of Mexican 

mangoes were exported to the United States last season. 

1973 Mexican 

producers 

pay APHIS 

for these 

services.

Plant health Mexican Avocado Program: APHIS personnel inspect Mexican avocadoes 

before they enter the United States. Last season, exports totaled 

approximately $95 million. A recently approved APHIS rule (effective January 

31, 2005) is expect to increase Mexico’s avocado exports, bringing revenues 

up to $300 million.

1997

 Plant health Mexican Citrus: APHIS personnel treat Mexican citrus before entering the 

United States. Last season a total of 600,171 boxes were exported to the 

United States with a commercial value of $3.9 million. 

1960s
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 64 GAO-05-272 International Trade

Activity/Program 

type Description of activity Time frame 

Budget 

1994–2004

Animal health Screwworm: The screwworm program is an eradication program which 

consists of cooperative programs with Mexico, countries of Central America, 

and Panama. The program has eradicated the pest up to the narrowest point in 

Panama. The screwworm production facility in Tuxtla–Gutierrez, Mexico 

operated in conjunction with the Mexican government remains the supplier of 

sterile flies, while APHIS, in cooperation with the Government of Panama 

completes construction of a state-of-the-art sterile fly-rearing facility in 

Panama, which will provide flies to maintain the barrier. The Screwworm 

Eradication Program uses a highly sophisticated technique to sterilize adult 

flies. The program disperses sterile flies where screwworm flies are 

indigenous. The sterile males mate with fertile wild females which results in 

nonviable egg masses and interrupts the insect’s life cycle. Additionally 

surveillance and cooperative agreements maintain constant field surveillance.

Program 

began in 

Mexico in 

1972

$157 million 

(estimate)

Animal health Exotic Animal Disease Commission (EADC): This Mexico–U.S. 

Commission was organized to eradicate and control foot and mouth disease 

(FMD). Freedom from FMD has made it possible for Mexico to trade cattle, 

other ruminants, and their products. Mexico exports more than one million 

head of cattle to the United States annually. The commission expanded its 

operation to other economically important animal and poultry diseases like 

avian influenza, exotic Newcastle disease, and, more recently, bovine 

spongiform encephalopathy (mad cow disease). Through the EADC, Mexican 

farmers have an avenue to trade with the United States once diseases are 

eradicated and prevented from entering Mexico.

1947 $5.61 million 

(estimate)

Animal health Tuberculosis and brucellosis: It is a requirement that these diseases be 

excluded from animals imported by the United States. Mexican animals often 

have these diseases. Through APHIS programs in cooperation with Mexico’s 

Ministry of Agriculture, Mexico regionalizes the diseases in order to be able to 

export animals to the United States. APHIS also conducts training programs 

for Mexican veterinarians in the diagnosis and epidemiology of tuberculosis 

and brucellosis.

N/A $200,000 

Animal health Rabies: Mexican farmers lose money in animal deaths and are themselves 

also at risk because of this disease. APHIS funding supports training at the 

U.S. Centers for Disease Control, salaries, travel, and office expenses. Since 

rabies is not specifically screened by U.S. import requirements, this program 

will decrease risk of rabid bovines being exported from Mexico to the United 

States. Wildlife along the Mexico–U.S. border is also a known reservoir for this 

disease. This situation prevents total eradication of rabies in the United States.

2004 Spending in 

Mexico 

$90,000

Total $286,183,000

Source: GAO. based on APHIS data.

(Continued From Previous Page)
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 65 GAO-05-272 International Trade

Economic Research Service 

(ERS)

Since 1996, ERS has spent $2.5 million in funding to implement the 

Emerging Markets Program to enhance Mexico’s capacity to collect, 

analyze, and disseminate agricultural information.1

 ERS officials said that 

Mexico’s enhanced data-gathering and reporting capability also benefits the 

USDA because reliable information allows the agency to make better 

informed decisions on bilateral agricultural trade. For a full list and 

descriptions ERS activities, see table 4.

Table 4: USDA Economic Research Service (ERS), Collaborative Activities with Mexico, 1994–2004

1

The Emerging Markets Program is an FAS program, but various USDA agencies implement 

activities under this program, which are listed in tables corresponding to the agencies 

discussed below.

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004

Emerging Markets 

Project 

Mexico’s annual agricultural outlook forum: USDA assisted in the 

initiation of Mexico’s first outlook forum in 2001. It organized the first 

plenary session, showcasing ERS’s short- and long-term commodity 

projections and U.S. farm policy analysis. It organized similar sessions for 

annual forums in the ensuing 3 years, 2002–2004.

2001–2004 $2.5 million 

Emerging Markets 

Project 

ERS poultry team works on follow-up analysis: In February 2003, an 

ERS poultry team visited Monterrey, Guadalajara, and Mexico City to 

gather price and other information and interview government and private 

sector officials involved at different levels of Mexico's poultry meat 

marketing system. The objectives were to analyze the current broiler meat 

market conditions/structure in Mexico, including analysis of costs of 

production and the shift in demand toward parts versus whole birds; to 

develop a flow chart describing chicken meat marketing channels; and to 

analyze the future prospects of Mexico's poultry sector, including 

production, consumption, and trade.

2003

Emerging Markets 

Project

Mexico's first regional food outlook forum: In November 2002, ERS 

analysts participated in Mexico’s first regional agricultural outlook forum in 

Mazatlan, Sinaloa. The ERS panel covered the long-term outlook for 

global food and agricultural markets, provisions of the new U.S. farm bill 

and its impact on Mexico, and the expected impacts of the removal of 

tariffs on most food and agricultural products in 2003 under NAFTA.

2002–2003

Emerging Markets 

Project

Joint pork and poultry analysis: In August 2002, ERS and the Mexican 

Ministry of Agriculture (SAGARPA) presented the findings of a joint ERS–

SAGARPA research project about economic challenges facing the 

Mexican pork and poultry industries. This briefing was part of a high-level 

meeting between Mexican and U.S. delegations headed by Under 

Secretaries Mayorga and Penn. The USDA and SAGARPA research 

teams submitted individual reports and agreed to an executive summary 

containing findings and policy options from the two reports.

2002
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 66 GAO-05-272 International Trade

Emerging Markets 

Project

Transportation initiative: The project sponsored a workshop in Laredo, 

Texas, in January 2001. According to information presented at the 

workshop, while incremental measures such as streamlining and 

automating customs clearance, expanding border facilities, and improving 

infrastructure will continue to reduce the effects of transportation 

bottlenecks, two key issues will affect the next generation of growth in 

U.S.–Mexican food and agricultural trade: 1) the development of Mexico’s 

rail system, spurred on by the privatization in the second half of the 1990s 

and greater integration with the U.S. and Canadian rail systems, and 2) the 

liberalization of truck access. 

2001

Emerging Markets 

Project

Analysis of NAFTA integration: The project provided major support for 

the U.S.–Mexico–Canada conference entitled, “North American Integration 

and Its Impact on the Food and Fiber System” held November 2000 in 

Washington, D.C. This activity focused on NAFTA impacts on the rural 

United States, Mexico, and Canada—including price convergence, food 

quality standards harmonization—and measurement and analysis of the 

ways in which the NAFTA partners are becoming more integrated. In 

September 2003, ERS published a synthesis report that identifies 

obstacles that continue to constrain markets in North America from 

functioning in unison, gauges the progress in uniting those markets, and 

identifies challenges and opportunities that could deepen market 

integration in North American agriculture. The Emerging Markets Officefunded workshop and the synthesis report were the catalysts for the 

establishment of the tricountry North American Agrifood Market Integration 

Consortium and its first forum in May 2004 in Cancun, Mexico.

2000–2004

Emerging Markets 

Project

Commodity analysis: To enhance SAGARPA’s ability to produce reports 

for a wide audience in the United States and Mexico, ERS initiated and 

collaborated in updating a report series for 11 commodities (corn, wheat, 

sorghum, poultry, dry beans, pork, beef, dairy, eggs, apples, and honey) 

starting in 1997. The dissemination of these reports grew to about 800 

copies per report, with broader dissemination via the Internet and through 

events like the annual Outlook Forum. SAGARPA released updated 

reports on corn, sorghum, and horticultural products at the 2004 forum. 

1997–2004

Emerging Markets 

Project

Data sharing: Under the Emerging Markets Project, file transfer protocol 

was set up to share information on agricultural production in Mexico and 

on U.S. trade. ERS has access to SAGARPA’s Agricultural Information 

System (SIACON). This system covers production data for livestock 

products and crops and farm level prices. The data are available by state, 

irrigated and nonirrigated area, and different seasons and agricultural year 

from 1980 through 1998. ERS now has access to the Bank of Mexico’s 

National Economic Structure Information System (SINIEE), with over 

23,000 data series, including producer and consumer prices for many 

agricultural and food products.

1997–2004

(Continued From Previous Page)

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 67 GAO-05-272 International Trade

Source: GAO, based on ERS data.

Agricultural Research Service 

(ARS)

In June 1998, ARS and Mexico’s Agriculture Research Institute, Instituto 

Nacional de Investigaciones Forestales, Agriclas y Pecuarias (INIFAP), 

signed a Letter of Intent to promote U.S.–Mexico collaboration in 

Emerging Markets 

Project

Effects of food quality management systems on U.S.–Mexico trade: 

The project evaluated the trade impacts on food sector businesses in the 

United States and Mexico of implementing quality management systems, 

both mandatory and voluntary. Information was collected via a survey of 

the costs and benefits of these quality management systems. About 300 

businesses in the United States were surveyed. The project also compiled 

a list of Mexican firms with assistance from the U.S. embassy in Mexico 

City. 

2002

Emerging Markets 

Project

Transformation of the Mexican produce distribution system: The 

Mexican produce distribution system is in the midst of major structural 

change. Small, specialized produce shops or stalls still account for the bulk 

of consumer produce purchases, but supermarket chains are rapidly 

gaining market share. A similar transformation occurred in U.S. produce 

markets from 1946 through 1965. The shift in food demand toward greater 

diversity and the upgrading of diets will likely create new opportunities for 

exporters in supplying a variety of niche markets and may require dealing 

with a different group of importing entities than U.S. exporters have 

historically targeted. The AMS report entitled Mexico’s Changing 

Marketing System for Fresh Produce. Emerging Markets, Practices, 

Trends, and Issues, which was published in October 2002, highlights these 

findings. 

2002

Emerging Markets 

Project

A comparison of food assistance programs in Mexico and the United 

States: U.S. food assistance programs tend to be counter-cyclical (as the 

economy expands, food assistance expenditures decline and vice versa). 

Mexican food assistance programs appear to be neither counter- nor procyclical. Food assistance programs have less impact on the extent of 

poverty in Mexico than in the United States, primarily because the level of 

benefits as a percentage of income is much lower in Mexico and because 

a much higher percentage of eligible households in the United States 

receive benefits from food assistance programs. These findings were 

published in the ERS report A Comparison of Food Assistance Programs 

in Mexico and the United States, which was published in July 2000. 

2000

Emerging Markets 

Project

Food safety and trade—the impact of the cyclospora problem in 

Guatemala on the raspberry Industry in Mexico and the United 

States: The project examined the impact of a food safety problem in 

Guatemala on the international raspberry market. Mexico, Guatemala, and 

Chile are the major raspberry exporters to the United States. Even though 

the United States, Mexico, and Chile did not themselves have food safety 

problems with raspberries, the cyclospora problem in Guatemala had a 

significant and sustained impact on their industries and on trade patterns. 

These findings were presented as a case study at the International 

Agricultural Trade Research Consortium meetings in Montreal in June 

2000. 

2000

(Continued From Previous Page)

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 68 GAO-05-272 International Trade

agricultural research programs. Since then, ARS has spent about $2.3 

million on several collaborative projects involving ARS and Mexican 

scientists. According to ARS officials, it is important for the United States 

that scientists in Mexico have academic backgrounds similar to their 

American counterparts’ in order to reach common solutions to problems 

that impact agriculture in both countries. For a full list and descriptions 

ARS activities, see table 5.

Table 5: USDA Agricultural Research Service, Collaborative Activities with Mexico, 1994–2004

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004 

Biotechnology Preserving corn germplasm: The North Central Plant Introduction Station 

has a long-standing collaboration with the International Maize and Wheat 

Improvement Center (CIMMYT), based near Mexico City, to exchange 

germplasm genetic resources. There is mutual regeneration and seed 

exchange on a periodic basis. ARS provides long-term storage and 

preservation of germplasm accessions (ongoing).

2001–2006 $2 million

Molecular/biotechnology corn research: ARS, Raleigh, North Carolina, 

collaborates with the University of Guadalajara on scoring Mexican corn 

populations for desirable traits, developing molecular markers and on 

teosinte (a close relative of corn) diversity. ARS, Columbia, Missouri, trained 

a CIMMYT scientist on molecular marker techniques and genome database 

research. ARS is cosupporting CIMMYT efforts to mirror the U.S. corn 

genome database (MaizeDB) and to integrate CIMMYT’s available crop and 

molecular information. ARS, Ames, Iowa, is collaborating with CIMMYT on 

improving corn’s nutritional quality. ARS, Tifton, Georgia, is cooperating with 

the University at Irapuato to quantify aflatoxin in feed corn (ongoing).

2003–2008 

Management of Bacillus thuringiensis (Bt) Resistance to Bt along the 

U.S.–Mexico border is extremely important since both spray applications and 

transgenic crops are in heavy use. ARS, Weslaco, Texas, and Manhattan, 

Kansas, are working with the Universidad Autónoma de Nuevo Leon, in 

Monterrey, Mexico, to study, at a molecular level, mechanisms of Bt 

resistance in Lepidoptera (butterflies and moths) (ongoing).

2001–2006 

Wheat and barley disease research: The USA Wheat and Barley Scab 

Initiative, managed by ARS, supports collaborative germplasm research with 

the CIMMYT Bread Wheat Program. CIMMYT scientists evaluate wheat and 

barley lines for natural resistance to scab, providing CIMMYT/Mexican 

scientists access to cutting-edge U.S. biotechnology research. ARS, 

Aberdeen, Idaho, and ARS, Manhattan, Kansas, support an agreement with 

CIMMYT to evaluate Karnal bunt (a fungal disease) resistance in wheat 

accessions. ARS and land-grant university wheat researchers visited 

CIMMYT and other Mexican research locations in April 2002 to develop 

further U.S.–Mexican collaboration on cereal disease research and extension 

(ongoing).

2000–2008 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 69 GAO-05-272 International Trade

Sorghum disease research: ARS, College Station, Texas, has an 

agreement with FUMIAF (INIFAP), Mexico, to control sorghum ergot (a 

disease that affects cereals) in northern Mexico and the United States. 

Research monitors the spread of sorghum ergot and screens sorghum 

accessions for ergot resistance at Rio Bravo, Tampico, Celaya, and Ocotlan, 

Mexico. This includes collaboration on assessing sorghum germplasm 

diversity using DNA markers with the ARS sorghum germplasm curator in 

Mayaguez, Puerto Rico (ongoing).

2003–2008 

The winter cotton nursery: In conjunction with maintaining a cotton 

germplasm collection of 7,000 cultivated and noncultivated cottons and 

closely related species at College Station, Texas, ARS manages a winter 

nursery at Tecoman, Colima, Mexico, in cooperation with INIFAP under a 

memorandum of understanding. The nursery increases seed availability, 

especially from non cultivated plants that flower only in the short days of 

winter, when U.S. weather is too cold for cotton. Mexican scientists also have 

access to the materials for research if the cotton lines are not restricted by 

intellectual property protection (ongoing).

2000–2005 

Monarch butterfly: ARS led a consortium of midwestern research 

institutions in a coordinated evaluation of the effect of Bt maize on monarch 

butterfly larvae in the field. The studies documented that Bt corn pollen is 

only a very small risk factor to the butterfly in real-world conditions. This 

finding is important to Mexico, the destination for butterfly migration in winter. 

The butterfly is considered a national treasure.

2003–2005

Preventing production of transgenic corn pollen: ARS research has 

developed technology to place transgenes very precisely in the genome so 

that their expression can be more predictable. In a research program that is 

in its initial phase, this technology will be combined with other ARSdeveloped innovations to prevent the production of transgenic corn pollen. If 

successful, this research would allow transgenic and indigenous corn to be 

grown side by side without any movement of transgenes.

2002–2006

Water research 

collaboration

Aquatic weeds: Since 2000, ARS scientists have collaborated with Mexican 

researchers in an effort to curb the spread of water hyacinth (Eichhornia 

crassipes) in Mexico’s dikes, reservoirs, and canals. Cooperators have 

introduced weevils and moths as biological control agents that have proven to 

be successful in reducing water hyacinth densities in the United States. 

2002–2007 Unfunded 

cooperation/inkind resources 

only

Assessment tools: ARS scientists at the Grassland Soil and Water 

Research Laboratory in Temple, Texas, in cooperation with scientists from 

Texas A&M, are working in Mexico to train INIFAP scientists on the use of 

ARS water resource and erosion models. The U.S. and Mexico team is 

currently using the ARS Soil and Water Assessment Tool (SWAT) to estimate 

impacts of different irrigation practices on water supplies affecting the Rio 

Grande River. 

(Continued From Previous Page)

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 70 GAO-05-272 International Trade

Conservation 

tillage cooperative 

research projects

Corn residues: Mexican scientists are conducting a study at many locations 

scattered about central Mexico to determine the effect of tillage and fertility 

practices and corn residue removal on crop yield and erosion control. The 

study sites included a wide range of soil and climatic conditions in order to 

determine soil carbon sequestration. Results are preliminary; however, there 

appears to be a fairly strong relationship between the fraction of residue 

removed and increased soil carbon with no-till farming methods at mean 

annual temperatures below 20 C.

2001–2006 Unfunded 

cooperation/inkind resources 

only

No-till: A study with the INIFAP group at Celaya. Long-term records indicate 

that organic carbon in certain soils of the state of Guanajuato, Mexico, has 

been reduced by agricultural practices from around 3 percent to 1.8 percent. 

A study has been conducted to develop data that supports the use of no-till 

farming for wheat-corn cropping systems, evaluate no-till for wheat and bean 

cropping systems, and assess the potential for rebuilding soil organic carbon 

in these soils. 

Natural resources 

management

Grazing management: At Tucson, Arizona, the research focus is on 

developing planning and evaluation methodologies for grazing management 

in northern Mexico and the southwestern United States. In 2003, ARS hired 

two graduate students to prepare data and adapt a hydrologic simulation 

model for application to rangelands in Mexico.

2001–2005 $25,000

Rangeland management: At Las Cruces, New Mexico, ARS scientists have 

been developing a rangeland monitoring manual in both Spanish and 

English. With INIFAP they cohosted workshops on monitoring technologies in 

both Mexico and the United States. Research collaborations continue in the 

development of indicators for rangeland monitoring that will be incorporated 

into the manual and future workshops to train and inform for ranchers and 

land management personnel. 

2002–2007 

(Continued From Previous Page)

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

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Animal health Screwworm eradication: In 2000, an ARS scientist was colocated with 

APHIS and a large Mexican government staff at the screwworm rearing 

facility in Tuxtla Gutierrez, Mexico, to provide technical assistance and 

research support for eradication program in Central America. At the request 

of the U.S.–Mexico Screwworm Commission, ARS is assisting Mexican 

officials in developing viable options for alternative use of the sterile 

screwworm plant at Tuxtla Gutierrez, Chiapas. After a new facility is 

constructed in Panama, the Chiapas plant is scheduled to close. 

2002–2004 $50,000

Cattle ticks: Since 2001, Scientists from ARS, Kerrville, Texas, and INIFAP, 

Cuernavaca, Morelos, are studying the southern cattle tick and horn fly to 

determine the nature and scope of pyrethroid and organophosphate pesticide 

resistance and develop practical guidelines to manage this resistance to 

protect livestock. A major goal is determining the mechanisms involved in 

resistance and develop an analysis to monitor resistance. 

2001–2004 

Africanized honeybees: ARS scientists at Weslaco, Texas, are working 

closely with their Mexican counterparts to assess the impact of Africanized 

honeybees on the pollination of vegetables and fruits. They will also 

investigate the impact on honeybees of hard and soft chemicals used in crop 

pest control. 

2003–2008 

Vesicular stomatitis virus occurrence in areas of Mexico where it is 

endemic: Since 2002, ARS scientists from Laramie, Wyoming, have been 

working with their Exotic Animal Disease Commission counterparts to 

generate basic epidemiological information about Vesicular stomatitis virus 

(VSV) occurrence in endemic areas in southern Mexico and establish the 

necessary conditions for field validation of VSV rapid diagnostic tests in welldocumented infected and noninfected cattle herds.

2002–2005

Plant health Planning meetings: In November 2000, ARS–Southern Plains Area (SPA) 

scientists met with INIFAP scientists to discuss research areas for future 

collaboration. There were approximately 40 scientists at the meeting, and 

research areas for potential collaboration included water management, plant 

and animal health, range management, and biotechnology. As a follow-up to 

the November meeting, ARS-SPA and INIFAP entomologists met in January 

2002 to discuss potential research collaboration. There were approximately 

20 scientists at the meeting, and potential collaborative research efforts 

included boll weevil, brown citrus aphid, and fruit flies. In February 2002, ARS 

and INIFAP scientists met to discuss the brown citrus aphid.

2000 $185,000

Late blight: Breeding for durable resistance to late blight. Late blight 

(Phytopthora infestans) is the most important potato disease worldwide, 

costing the United States about $200 million annually for control. ARS 

scientists are working with Mexican counterparts in the Toluca Valley, where 

late blight originated and all known strains occur, providing heavy disease 

pressure all season every year.

2003–2006 

Expanding the pollinator base for Southern California avocados: ARS–

Northern Plains Area scientists were working with a scientist from la 

Universidad de las Americas in collecting insects to link pollinators to 

pollination success. Pollination efficiency studies were conducted through the 

use of bagged and unbagged flowers.

2003–2004

(Continued From Previous Page)

Activity/Program

type Description of activity Time frame

Budget from 

1994–2004 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 72 GAO-05-272 International Trade

Foreign Agricultural Service 

(FAS), International Cooperation 

and Development 

Over the past 10 years, FAS/ICD has spent a total of $1.8 million on its 

Scientific Cooperation Research Program (SCRP) and Cochran Fellowship 

Program (CFP). Under SCRP, U.S. and Mexican scientists have conducted 

joint research and scientific exchanges for over 20 years to help solve 

mutual food, agricultural, and environmental problems. Since NAFTA was 

enacted, SCRP has sponsored 32 joint agricultural research projects among 

Food safety Extend the shelf life of regional cheese: ARS scientists at the Eastern 

Regional Research Center, Wyndmoor, Pennsylvania, in collaboration with 

Mexican researchers from CIAD (Centro de Investigacion en Alimentacion y 

Desarrollo), Cuauhtemoc, Chihuahua, Mexico, have characterized the 

chemical, textural, sensory, and microbiological properties of fresh 

Chihuahua cheeses and other cheeses from the region. The purpose of the 

project is to extend the shelf life of regional cheeses. 

2002–2004 $15,000

Pathogen control in poultry: The development of nonantibiotic alternatives 

for food-borne pathogen control in poultry. ARS in Fayetteville, Arkansas, and 

the Autonomous University of Mexico started a formal cooperation after 

September 2001 to evaluate the microflora populations in the gastrointestinal 

tract of poultry, including the niche environments of food-borne pathogens. 

2001–2006 Unfunded 

cooperation/inkind resources 

only

Planning meeting: On October 1, 2002, INIFAP and ARS cohosted a 

meeting with the main Mexican agricultural research and academic 

institutions and Consejo Nacional de Ciencia y Tecnologia (CONACyT), 

Mexico’s National Council of Science and Technology. Representatives 

agreed to refocus efforts in agricultural research, education, and exchanges 

to address specific agricultural problems of mutual concern through joint 

research and cooperation in capacity-building. 

2002 Unfunded 

cooperation/inkind resources 

only for the 

planning 

meeting and the 

collaborative 

research 

Collaborative research workshops: In 2003, five workshops were 

organized by the ARS and its Mexican counterpart, the National Institute for 

Forestry and Agricultural Research (INIFAP). The scientists who participated 

at the workshops developed 106 potential collaborative research projects of 

mutual interest and benefit for both countries. Mexican scientists and their 

ARS counterparts then developed 22 research proposals to be presented to 

the Mexican National Council for Science and Technology (CONACyT) for 

funding at its sectorial fund CONACyT–SAGARPA opening on September 

2003. From these proposals, eight were approved for funding starting in 

2004. 

2003 workshops. In 

the case of Bt 

resistance 

monitoring, the 

budget 

dedicated was 

$8,000.

Bt resistance monitoring: ARS and INIFAP sponsored a workshop in April 

2004 to adopt common protocols for and to coordinate U.S.–Mexican Bt 

resistance monitoring. INIFAP and ARS have been cooperating in resistance 

monitoring on a small scale in Mexico. ARS and INIFAP agreed that 

enhanced scientific cooperation in this area would be of mutual benefit to 

Mexican and U.S. cotton growers and regulatory agencies and arranged a 

workshop to start expanding collaborative research in this subject. 

2004–2005

Total $2,284,412

Source: GAO, based on ARS data.

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Activity/Program

type Description of activity Time frame

Budget from 

1994–2004 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 73 GAO-05-272 International Trade

U.S. and Mexican universities and other research institutions, of which 

about half have been related to trade. In addition, FAS administers CFP, 

which provides U.S.-based agricultural training opportunities for senior 

and midlevel specialists and administrators from the Mexican public and 

private sectors who are concerned with agricultural trade, agribusiness 

development, management, policy, and marketing. For a full list and 

descriptions of FAS/ICD activities, see table 6.

Table 6: USDA Foreign Agricultural Service, International Cooperation and Development (ICD), Collaborative Activities with 

Mexico, 1994–2004

Activity/Program

type Description of activity Time frame Budget 

Emerging Markets 

Program 

Mexican congressional delegation on biotechnology: Thirteen members 

of the Mexican Congress traveled to Washington, D.C., to obtain information 

and make decisions on labeling of biotechnology foods. Mexico is a $3.1 

billion market for U.S. processed foods. Several of the congressional 

members commented to the Agriculture Attaché that what they learned in the 

United States on biotechnology from Food and Drug Administration (FDA) 

and the American Medical Association had convinced them that there was no 

need for labeling of biotechnology foods.

2001 $463,500 

Emerging Markets 

Program 

Mexico Food Safety Workshop: The Trade and Investment Program, the 

USDA Biotechnology Group, and FAS/Mexico City coordinated a Mexico 

Food Safety Workshop, which was held in Mexico City from June 16–18, 

2004. The workshop involved approximately 20 participants from the Mexican 

Ministries of Health, Agriculture, Economics, and Education, as well as the 

Mexican Center for Research on Food and Development. Seven participants 

from FDA, Environmental Protection Agency, and USDA, as well as two 

representatives from the Novel Foods Division of Health Canada also 

attended. The purpose of the workshop and related meetings was to address 

issues related to regulatory requirements and safety assessments related to 

biotechnology in North America. 

2004

Emerging Markets 

Program 

Agricultural biotechnology workshop for Latin American farmers: In 

August 2004, FAS/ICD sponsored a workshop for farmers and farm leaders 

at Zamorano University in Honduras on agricultural biotechnology. The 

workshop provided farmers from 17 Latin American countries (including 

Mexico) with information to increase farmers' awareness of challenges and 

benefits of agricultural biotechnology. The workshop was organized in 

collaboration with Zamorano University, Cornell University, and REDBIOA, a 

network of strategies and policies for assistance to national biotechnological 

research programs in Latin America and the Caribbean. 

2004
Appendix IV

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Agricultural Trade (1994–2004)

Page 74 GAO-05-272 International Trade

Activity/Program

type Description of activity Time frame Budget 

Emerging Markets 

Program 

Mexico agricultural trade missions: Under the U.S.–Mexico Partnership for 

Prosperity, FAS/ICD, Mexico’s Ministry of Agriculture and the Food Marketing 

Institute conducted trade missions to Mexico in March 2003 and March 2004. 

The purpose was to identify trade and investment opportunities between 

Mexican horticultural producers and U.S. supermarkets. Thirty-one U.S. 

representatives from 16 companies established long-term business contacts 

and/or initiated produce-sourcing arrangements. Participants visited 10 farms 

in Jalisco, Sinaloa, Sonora, and Guanajuato that produce tomatoes, bell 

peppers, cucumbers, eggplant, and onions. U.S. companies that participated 

in the 2003 mission expected to purchase approximately $104 million worth 

of produce from Mexican growers as a result of the activity. 

2003–2004

Emerging Markets 

Program 

Trade show seminars: FAS/ICD/Food Industries Division/Trade and 

Investment Program conducted seminars on food safety, U.S. wines and 

cheeses, seafood handling, and produce marketing, and promoted the Export 

Credits Facilities Credit Guarantee program and Supplier Credit Guarantee 

program in tandem with the annual ANTAD (2001), ABASTUR (2001), and 

EXPHOTEL (2000, 2002, 2003, and 2004) trade shows. These programs 

were coordinated with the Agricultural Trade Office in Mexico City. 

2001–2004

Emerging Markets 

Program/Cochran 

Fellowship Program

Biotechnology short course: The Trade and Investment Program and the 

Cochran Fellowship Program worked in partnership with Michigan State 

University to design and implement six short courses on agricultural 

biotechnology. Twenty-five participants from 13 countries in Latin America 

and the Caribbean (including six participants from Mexico) were selected 

from local and national level government bodies, private industry, 

nongovernmental organizations, and universities. This course prepared 

participants to play an informed, guiding role in the public debate and 

discussions on biotechnology in their home countries. Participants engaged 

in sessions on the science of biotechnology, but the primary focus of the 

course was on biotechnology’s relationship to market access and the trade of 

agricultural products. The 2-week course covered such topics as research 

and development, biotech regulations, international organizations, global 

economy, marketing and consumers, food security, and technical assistance. 

The course included activities in Washington, D.C., at Michigan State 

University, and at Texas A&M University. 

2004

Emerging Markets 

Program 

Cold chain field assessment: USDA conducted a cold chain field 

assessment of cold-storage facilities in Laredo, Texas; Mexican trucking 

companies and supermarkets; and central markets in Monterrey and Mexico 

City. Over 100 perishable food producers, importers, distributors, and 

transportation and refrigeration providers attended a seminar on “Maintaining 

the Cold-Chain from Port to Consumer.” 

2000

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Agricultural Trade (1994–2004)

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Activity/Program

type Description of activity Time frame Budget 

Emerging Markets 

Program 

Cold chain technical assistance: USDA provided two weeks of technical 

assistance on produce marketing, cold storage logistics, and the Hazard 

Analysis and Critical Control Point to Mexican companies, including a 

wholesaler from Mexico City’s Central Market, a fruit 

grower/importer/distributor, a meat importer/processor, and a refrigeration 

company. In September 2003 those companies were visited again to monitor 

the success of earlier assistance and to give additional advice. One Mexican 

company and a major U.S. cold-storage company were constructing a new 

meat processing and distribution facility. Another company was able to double 

and triple fresh fruit imports from Washington state and northern California, 

respectively, by air conditioning an adjacent storage space. It also reduced 

shrinkage through better temperature monitoring and improved trucking 

services.

2002

Emerging Markets 

Program 

Cold chain: In the fall of 2004 two participants attended a program providing 

understanding of proper management of refrigerated and frozen foods. The 

program began with training covering topics such as: an overview of the 

entire cold-chain process, from producer to consumer; quality maintenance 

from producer to wholesaler to retailer; characteristics of cold-storage rooms; 

transportation and distribution systems for refrigerated and perishable 

products; receiving and managing perishable products at the port and in the 

store; packaging and merchandising perishable products; waste 

management; and methods for extending shelf life.

2004

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Agricultural Trade (1994–2004)

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Activity/Program

type Description of activity Time frame Budget 

Cochran Fellowship 

Program 

Five-a-Day promotion program: The training provided officials from the 

newly formed “Fundacion Campo y Salud” with important information 

regarding Five-a-Day program development, establishment, and operation. 

The training took place in Washington, D.C., and Wilmington, Delaware, and 

included meetings with officials from USDA, the National Cancer Institute, 

and the Produce for Better Health Foundation. In April and May 2003, four 

participants attended training.

2003 $183,225 

Cochran Fellowship 

Program 

Meat and poultry inspection: FSIS conducted seminars from 1999-2004 

providing in-depth knowledge regarding U.S. inspection procedures and 

regulations used to ensure that meat, poultry, and egg products are safe, 

wholesome, and properly labeled. Emphasis was placed on Hazard Analysis 

and Critical Control Point and pathogen reduction initiatives. A few seminars 

were given in Spanish, and in some participants took field trips during the 

training to farms, slaughterhouses, processors, and port facilities. A total of 

29 people participated from 1999 to 2004. 

 1999–2004

Cochran Fellowship 

Program 

Veterinary epidemiology: In 2001, a participant attended a seminar 

focusing on training veterinary epidemiologists regarding U.S. standards and 

techniques to identify, control, and eradicate animal diseases such as foot 

and mouth, screwworm, swine fever, etc. The purpose of the training was to 

provide other governments pursuing these diseases a means by which to be 

proactive in excluding diseases from the United States.

2001

Cochran Fellowship 

Program 

Veterinary biologics: In 2003, one participant attended a seminar providing 

the participants with in-depth training regarding the scientific principle of 

vaccines and vaccination and of the USDA regulatory process for assuring 

the purity, safety, potency, and efficacy of veterinary biologics. Topics 

included Immunology and Principles of Vaccination, Procedures for Ensuring 

Vaccine Safety and Efficacy, Potency and Safety Testing, and Diagnostic Test 

Kit Evaluation. 

2003

Cochran Fellowship 

Program 

Veterinary medicine: A total of eight participants from Mexico attended the 

Southwestern Veterinary Symposium, which included presentations on food 

animal disease diagnosis and treatment, public health, and epidemiology and 

addressed U.S. import requirements, identification and quarantine of 

diseased livestock, and disease control and eradication issues in Mexico.

2001

Cochran Fellowship 

Program 

Foreign animal disease: In 2002, one participant from Mexico attended a 

course providing an overview of Foreign Animal Diseases, including 

epidemiological animal surveillance, diagnosis of foreign animal diseases, 

and controlling methods. 

2002

Cochran Fellowship 

Program 

Risk management: In 2001, one participant from Mexico attended a seminar 

to increasing knowledge of risk management in terms of agricultural 

insurance for crops, livestock and farms, machinery, and farm buildings. 

Topics included banks and financial markets; assessing risk; determining 

premiums; new technology to evaluate risk, inspect damage, and adjust loss; 

sources of financial data; index-based insurance; catastrophic bonds; needs 

of agribusinesses; and new tendencies in risk management theories.

2001

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Agricultural Trade (1994–2004)

Page 77 GAO-05-272 International Trade

Activity/Program

type Description of activity Time frame Budget 

Cochran Fellowship 

Program 

Animal health policy: In 2000, one participant from Mexico attended training 

providing in-depth understanding of how animal health policy evolves and is 

implemented at state, national, and international levels. Topics included 

animal health policy evaluation, leadership methods, food safety, how to 

influence policy makers, strategic planning, inter governmental relations and 

regionalization, the role of special interest groups and the media, and 

legislative perspectives.

2000

Cochran Fellowship 

Program 

Grain handling: In 2000, one participant from Mexico attended training 

providing in-depth knowledge regarding US grain quality and handling 

procedures. Topics included grain storage procedures, drying and handling 

equipment, grain grading and inspection procedures, handling/loading for 

transportation, land vs. ocean transportation, preservatives and their 

applications, factors affecting grain quality in handling, and export programs. 

2000

Cochran Fellowship 

Program 

Food safety/hazard analysis and critical control point (HACCP): In 1999, 

nine participants from Mexico attended a course designed to prepare officials 

to review a plant’s HACCP plan, determine if the plan was properly 

implemented and maintained, and react to minor or major discrepancies in an 

appropriate and effective manner. Topics included an overview of FSIS food 

safety goals and strategies, HACCP overview and principles, steps in the 

development of the HACCP system and relationship of Hazard Analysis and 

Critical Control Point/Good Manufacturing Practices/Sanitation Standard 

Operating Procedures, microbiological testing, E. coli and salmonella, the 

revised Performance-Based Inspection System, basic 

compliance/noncompliance of plans, and consumer protection. 

1999

Cochran Fellowship 

Program 

Rural finance: In 2004, six participants from Mexico attended a program that 

trained them in the areas of credit administration, credit compliance, risk 

management, and greenhouse project assessment.

2004

Scientific 

Cooperation 

Research Program

Research project: The University of Florida in collaboration with Alimentos 

Del Fuerte, Los Mochis, Sinaloa, worked on a project titled “Characterization 

of strains of Xanthomonas campestris pv. Vesicatoria in Mexico and the 

impact of resistant genotypes and bactericides.”

1991–1994 $1.2 million 

Scientific 

Cooperation 

Research Program

Research project: USDA/Forest Service worked in cooperation with Centro 

de Genetica Forestal, A.C. on a project titled “Cooperative program for the 

conservation of biodiversity.”

1992–1995

Scientific 

Cooperation 

Research Program

Research project: The University of Idaho collaborated with Centro 

Internacional de Mejoramiento de Maiz y Trigo (CIMMYT) on a project titled 

“Identification of novel or under utilized sources of nuclear and cytoplasmic 

germplasm in wheat.” 

1993–1995

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Gainesville, Florida, worked with Instituto de 

Ecologia, Xalapa, Veracruz on a project titled “Host-finding by parasitoids of 

species of anastrepha and the importation of Caribbean fruit fly natural 

enemies.” 

1993–1996

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Tucson, Arizona, worked with Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Comparative research on integrated watershed management at 

Walnut Gulch, Arizona and Rio Matape, Sonora, Mexico.”

1993–1996

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Agricultural Trade (1994–2004)

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Activity/Program

type Description of activity Time frame Budget 

Scientific 

Cooperation 

Research Program

Research project: Colorado State University collaborated with the University 

of Baja California School of Veterinary Medicine on a project titled “Bovine 

tuberculosis in Baja California, Mexico: A prototype program for surveillance 

and control.” 

1993–1996

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Maryland, collaborated with Centro 

Internacional de Mejoramiento de Maiz y Trigo (CIMMYT) on a project titled 

“Correlation between PCR-based seed assay and development of Karnal 

bunt in the field.” 

1995–1998

Scientific 

Cooperation 

Research Program

Research project: The University of Missouri collaborated with Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Epidemiology of bovine hemoparasitic diseases in selected 

areas of Central America and Mexico.” 

1995–1998

Scientific 

Cooperation 

Research Program

Research project: The University of Wisconsin collaborated with 

Guadalajara University on a project titled “Pulp and paper from agricultural 

materials via environmentally benign processes.” 

1995–1998

Scientific 

Cooperation 

Research Program

Research project: The University of California collaborated with the 

University of Baja California on a project titled “Brucellosis in goats in the 

Mexicali Valley: Risk factors for herd infection and health risks of REV-1 

vaccination.” 

1996–1999

Scientific 

Cooperation 

Research Program

Research project: The University of Arizona collaborated with Universidad 

de Sonora on a project titled “Categorization of isolates of the root rot fungus, 

phymatotrichum and its fungal antagonists for the development of biological 

control strategies in the U.S.”

1997–2000

Scientific 

Cooperation 

Research Program

Research project: The University of Massachusetts collaborated with the 

University of Nuevo Leon on a project titled “Presence and enterotoxigenicity 

of Clostridium perfringens in U.S. and Mexican foods.”

1997–2000

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Texas, collaborated with the Center for 

Genetics and Advanced Studies on a project titled “Improvement of fruit 

storage-life and quality in muskmelon by genetic transformation.” 

1998–2001

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Arizona, cooperated with the Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Extension of the rangeland health concept and associated 

classification schemes into Mexico.”

1998–2001

Scientific 

Cooperation 

Research Program

Research project: The University of Missouri collaborated with the Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Vaccine control of bovine babesioisis/prevention in U.S. and 

Mexico.”

1998–2001

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Hawaii, and the USDA/APHIS collaborated 

with the Colegio de la Frontera Sur on a project titled “Strain development 

and field evaluation of biosteres arisanus for control of fruit flies in Hawaii, 

Mexico, and Guatemala.” 

1998–2001

Scientific 

Cooperation 

Research Program

Research project: New Mexico State University collaborated with the 

Universidad Autonoma de Chiapas on a project titled “The density and 

diversity of parasitic hymenoptera as bio-indicators of habitat disturbance in a 

cotton producing region of tropical Mexico.”

1999–2002

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Agricultural Trade (1994–2004)

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Activity/Program

type Description of activity Time frame Budget 

Scientific 

Cooperation 

Research Program

Research project: North Dakota State University collaborated with the 

Institucion de Ensenanza e Investigacion En Ciencias Agricolas on a project 

titled “Comparison of the calcium, iron, zinc, and magnesium, contents of 

bean seed of Mexican and American origin.”

1999–2001

Scientific 

Cooperation 

Research Program

Research project: Northern Arizona University collaborated with Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Managing fragmented Douglas-fir ecosystems in Southwestern 

North America for long term sustainability.”

1999–2002

Scientific 

Cooperation 

Research Program

Research project: The University of California collaborated with the 

Universidad Autonoma del Estado de Mexico on a project titled “Population 

genetic characterization of naturally sympatric and allopatric populations of 

teosinite with maize in Mexico: Implications.”

1999–2002

Scientific 

Cooperation 

Research Program

Research project: The University of Florida functionally collaborated with 

Monterrey Institute of Technology on a project titled “Properties of improved 

natural pigments (antimicrobial compounds).”

2001–2004

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Pennsylvania, collaborated with Centro de 

Investigacion en Alimentaction y Dessarollo, Chihuahua, on a project titled 

“Modification of cheese-making parameters to extend the shelf-life of 

Hispanic-style fresh cheeses.” 

2001–2004 

Scientific 

Cooperation 

Research Program

Research project: Yale School of Forestry/Environmental Sciences 

collaborated with Centro de Investigaciones Avanzados Unidad Merida on a 

project titled “Implications for agrarian change and the status of crop genetic 

resources in Yucatan, Mexico.” 

2001–2004 

Scientific 

Cooperation 

Research Program

Research project: USDA/APHIS, Hawaii, collaborated with ECOSUR (a 

research institute devoted to ecological studies in southern Mexico) on a 

project titled “Controlling the Mediterranean fruit fly: Improving the sterile 

insect technique via nutritional and olfactory manipulation.”

2001–2004

Scientific 

Cooperation 

Research Program

Research project: The University of Arkansas “Solutions to food safety and 

security problems for Mexico and the United States (U.S.): Development of 

non-antibiotic and alternative controls.” 

2002–2005

Scientific 

Cooperation 

Research Program

Research project: The University of California Riverside collaborated with la 

Universidad Autonoma Chapingo on a project titled “Conservation and 

restoration of wild avocado (Persea spp.) in Mexico.”

2002–2005

Scientific 

Cooperation 

Research Program

Research project: The USDA/ARS, Maryland, cooperated with the 

International Cooperative Potato Late Blight Program on a project titled 

“Cooperative testing of late blight resistance.” 

2003–2006

Scientific 

Cooperation 

Research Program

Research project: USDA/ARS, Washington, collaborated with Instituto 

Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) on a 

project titled “Enhancing resistance in Mexican pinto bean cultivars to 

common bacterial blight.”

2003–2006

Scientific 

Cooperation 

Research Program

Research project: The University of Wisconsin initiated a project with 

Instituto Tecnológico de Veracruz titled “Identifying potential cancer 

chemopreventive agents in maize.”

2004–2007

(Continued From Previous Page)
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 80 GAO-05-272 International Trade

Agricultural Marketing Service 

AMS

AMS has spent about $548,200 since 1994 in collaborative activities with 

Mexico. Most of AMS activities consist of providing training to Mexican 

fresh fruit and vegetable inspectors to help them meet U.S. inspection 

standards. For a full list and descriptions of AMS agricultural collaborative 

activities, see table 7.

Table 7: USDA Agricultural Marketing Service (AMS), Collaborative Activities with Mexico, 1994–2004

Activity/Program

type Description of activity Time frame Budget 

Scientific 

Cooperation 

Research Program

Research project: Cornell University, in collaboration with the Monterrey 

Institute of Technology (ITESM), initiated a project titled “Effects of tortilla 

processing on the fate and bioavailability of phytochemicals in high 

carotenoid and pigmented corns.” 

2004–2007

Scientific 

Cooperation 

Research Program

Research project: The University of New Mexico, in collaboration with El 

Centro de Desarrollo Humano hacia la Comunidad, Cuernavaca, Morelos 

initiated a project titled “Nutritional & medicinal agricultural product sharing 

between underserved communities in Mexico and the United States.”

2004–2007

Scientific 

Cooperation 

Research Program

Research project: The Southwestern Indian Polytechnic Institute, in 

collaboration with the State Government of Chihuahua, initiated a project 

titled “Application of hydroponic forage production in arid lands.”

2004–2007

Total $1,836,855 

Source: GAO, based on FAS/ICD data.

(Continued From Previous Page)

Activity/Program 

type Description of activity Time frame Budget

Emerging Markets 

Program 

Inspection training/ destination market inspection: With support from 

the Emerging Market Program, AMS is providing training in the United 

States to Mexican fresh fruit and vegetable inspectors. Objectives of this 

project include helping SAGARPA develop a professional inspection 

service and establish a codified fruit and vegetable grading and standards 

system, bringing Mexico’s marketing system for fruits and vegetables closer 

to that of the United States and Canada.

1999 and 2002 $491,200 

Emerging Markets 

Program 

Dispute resolution corporation: The objective is to efficiently resolve 

disputes between exporters and importers, assisting Mexico’s agricultural 

commodity markets to operate similar to those in Canada and the United 

States and increase U.S. exports to Mexico.

2004

Fruit and vegetable 

standards

Market information organization of the Americas: The objective was to 

enhance the dissemination of market information in domestic to producers, 

importers, and shippers. 

1999 (ongoing) $27,000

Fruit and vegetable 

standards

Research and promotion: The objective was to facilitate Mexico 

understudying of AMS research and promotion activities.

2002 and 2004 
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 81 GAO-05-272 International Trade

National Agricultural Statistics 

Service (NASS)

NASS has been involved in a few collaborative activities in Mexico since 

1997. Using the Emerging Markets Program, NASS has spent $361,000 to 

help improve the agricultural statistics system and methodology in Mexico. 

As part of this assistance, NASS provided training to analysts from 

Mexico’s agricultural statistics service, Servicio de Información y 

Estadística Agroalimentaria y Pesquera (SIAP). This training focused on 

methodology for preparing official agricultural statistics. For a full list and 

descriptions of NASS activities, see table 8.

Activity/Program

Type Description of activity Time frame Budget 

Research 

publications

Research projects: The objective was to provide information to U.S. 

exporters on the transportation and logistical infrastructure, facilities, and 

services used to support U.S. exports to Mexico. Publications include (1) 

Mexico’s Agricultural Trade Infrastructure for Apples and Pears, by Juan 

Batista and John W. Hagen, Center for Agricultural Business, California 

State University, Fresno, 1994, CATI Publication #940201; (2) “Logistics 

and Perishables Trade Between the United States and Mexico,” Richard 

Beilock, Roger Clemens, James Dunn, and Barry Prentice, University of 

Florida, Gainesville, May 1995, Economics Report ER 95-1; 12-25-A-3381; 

and (3) “Shipping U.S. Grain to Mexico,” by Keith A. Klindworth and Arne J. 

Martinsen, Marketing and Transportation Analysis, Transportation and 

Marketing, September 1995, USDA AMS Marketing Research Report 

Number 630.

1994–1995 $30,000 

Total $548,200 

Source: GAO, based on AMS data.

(Continued From Previous Page)
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 82 GAO-05-272 International Trade

Table 8: USDA National Agricultural Statistics Service (NASS), Collaborative Activities with Mexico, 1994–2004

Food Safety and Inspection 

Service (FSIS)

Since 2001, FSIS has implemented a small number of activities valued at 

$298,412 under the Emerging Markets Program in Mexico. Most of these 

activities consist of providing training and technical assistance to Mexican 

meat and poultry exporters to help them meet U.S. import regulations. For 

a full list and descriptions of FSIS activities, see table 9.

Activity/Program

type Description of activity Time frame Budget 

Emerging Markets 

Project

Training for SIAP (Mexico’s Agricultural Statistics Service): NASS 

conducted training and implementation of objective yield measurement 

surveys for crops important to U.S.–Mexico trade (corn, soybeans, sorghum, 

and avocados). These surveys provide an accurate indication of the yield and 

available production of these crops.

1997–2002 $67,000 

Emerging Markets 

Project

Training for SIAP: Mexican analysts from SIAP attended seminars and 

training on the methodology used in NASS to prepare official agricultural 

statistics and the responsibilities shared between the federal- and state-level 

organizations. These activities have included both visits from NASS personnel 

to Mexico and Mexican analysts’ visits to NASS headquarters and field office 

locations.

2003–2004 $294,000

Emerging Markets 

Project

Training for SIAP: Mexican analysts from SIAP attended seminars and 

training on the use of NASS’s area frame, multiple frame, and remote sensing 

techniques in the preparation of agricultural statistics. These seminars have 

included training in sophisticated sampling techniques to improve the 

efficiency of the agricultural surveys conducted. SIAP analysts are currently 

producing their first general-purpose area frame for use in several statistical 

surveys.

Total $361,000

Source: GAO, based on NASS data.
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 83 GAO-05-272 International Trade

Table 9: USDA Food Safety and Inspection Service (FSIS), Collaborative Activities with Mexico, 1994–2004

Other U.S. Agencies In its efforts to protect U.S. consumers, FDA has also undertaken activities 

that benefit Mexican agricultural producers. FDA’s approach has been to 

work with Mexican government agencies to help them establish effective 

food safety regulatory, inspection, and enforcement infrastructure, 

Activity/Program

type Description of activity Time frame Budget 

Emerging Markets 

Program

Pathogen reduction: Using Emerging Markets Program funding, FSIS has 

provided pathogen reduction training to Mexican meat and poultry inspection 

officials in order to assist SAGARPA in implementing the standards necessary 

for Mexican plants to export meat and poultry products to the United States. 

This consisted of activities for improving knowledge of HACCP principles and 

for improving knowledge of FSIS microbiology testing methods. 

2001 $98,458 

Emerging Markets 

Program

Technical assistance activity: This activity consisted of providing technical 

assistance to assure the continuation of safe and wholesome meat and 

poultry exports from Mexico to the United States. Mexican government 

officials (from headquarters to inspection officials located at exporting 

Mexican establishments) obtained technical assistance on meeting equivalent 

requirements of the U.S. meat and processed poultry inspection system. 

2003 $73,434 

Emerging Markets 

Program

Technical assistance activity: Mexican officials obtained inspection 

requirements training and technical assistance for fresh-slaughtered poultry 

and egg products to help the officials meet equivalent requirements of the 

U.S. slaughter poultry and egg products inspection system. 

2004 $15,000 

Emerging Markets 

Program–U.S. Codex 

Office

Support for Western Hemisphere countries' WTO participation: Working 

with the Inter-American Institute for Cooperation on Agriculture (IICA), FAS 

supports attendance at WTO/SPS committee meetings by select 

representatives of trade and regulatory agencies of the 34 IICA member 

countries (including Mexico). FAS’s Emerging Markets Program funded this 

project, which helps countries in the hemisphere implement international 

trade agreements. All 34 IICA member countries sent representatives to 

WTO/SPS meetings held in Geneva in November 2002; FAS also supported 

their participation in WTO meetings in April and June 2003. For 2004, Mexico 

has become a member of the Steering Committee for this program and, 

therefore, no longer receives funding to attend the meetings.

2002 $10,000 

Emerging Markets 

Program–U.S. Codex 

Office

Regional Codex Workshop: FAS/ICD, in cooperation with the U.S. Codex 

Office, organized a technical workshop in Mexico City, Mexico, in May 2004 

for 31 Codex contact points and policymakers from 22 Latin American and the 

Caribbean nations, including Mexico. The workshop addressed food safety 

guidelines and avoidance of potential barriers to sanitary-phytosanitary 

protocols. Presenters from USDA/FSIS, USDA/FAS, FDA, and the countries’ 

Codex offices addressed topics that included the following: key issues of the 

Codex Alimentarius Commission, Codex National Committees; CCLAC 

Strategic Plan; SPS, TBT and TRIPS agreements, equivalence and Codex 

guidelines; product trace back; risk analyses; and biotechnology labeling. 

2004 $101,520 

Total $298,412 

Source: GAO, based on FSIS data.
Appendix IV

U.S.–Mexico Collaborative Activities Benefit 

Agricultural Trade (1994–2004)

Page 84 GAO-05-272 International Trade

focusing particularly on microbiological hazards. For example, if a foodborne disease outbreak resulting from a Mexican import occurs, FDA 

determines the cause and works with the Mexican government to try and 

resolve the problem and develop a system to prevent future outbreaks. 

FDA officials explained that in 1997 their agency launched its Food Safety 

Initiative (FSI) to improve the safety of the U.S. food supply, which 

includes imported foods. Because Mexico exports around $3 billion in 

fruits and vegetables to the United States each year, an important FSI 

component has been to help Mexican commodity exporters become more 

familiar with FDA regulatory requirements and to improve their ability to 

comply with U.S. food safety regulations. FDA activities under FSI have 

basically involved a series of training programs since 2002 for Mexican fruit 

and vegetable exporters, academics, and government officials. In addition 

to activities under FSI, FDA established the Southwest Import District 

Office in 1999 to enhance food inspection activities along the Mexican 

border. The Southwest Import District inspects imported goods entering 

the United States through the Mexican Border from Brownsville, Texas, to 

San Diego, California. During the last 4 years, FDA’s Center for Veterinary 

Medicine has also participated in training and assisted in the establishment 

of a program in four agricultural states of Mexico to monitor pathogens 

that are transmitted via contaminated food. FDA reported it has spent 

about $1.8 million for its activities related to agricultural production in 

Mexico since NAFTA went into effect.
Page 85 GAO-05-272 International Trade

Appendix V

Recent U.S.–Mexico Collaborative 

Agricultural Activities under Partnership for 

Prosperity ApendxiV

The Partnership for Prosperity (P4P) initiative has a few collaborative 

programs that are oriented towards agriculture. On the U.S. side, USDA’s 

FAS, OPIC, and USAID have played key roles in implementing the 

programs.1

 Overall, P4P seeks to create a public-private alliance and 

develop a new model for U.S.–Mexican bilateral collaboration to promote 

development, particularly in regions of Mexico where economic growth 

has lagged and is fueling migration. No new funds were specifically 

allocated to P4P by either government since the program’s inception; 

instead, the U.S. government has sought to refocus resources already 

devoted to Mexico to create a more efficient collaborative network. 

According to State Department and USDA officials, since its establishment, 

P4P has become the “umbrella” under which development collaboration 

between the United States and Mexico takes place.

USDA’s FAS has worked closely with several Mexican government 

agencies, including Mexico’s new rural lending institution, Financiera 

Rural, to incorporate P4P’s broader approach to rural development and 

assistance to small farmers. For example, FAS arranged for USAID to use 

its U.S. fellowship program to place one of its participants at Financiera 

Rural. Through this fellowship, Financiera Rural hosted a professor from 

the University of Minnesota who assisted the agency in developing a 

strategic plan to incorporate the new paradigm for rural development 

proposed in the P4P conferences, acknowledging that Financiera Rural is 

better suited to operate as a second-tier lender. This strategic plan calls for 

the development of rural financial lending intermediaries in Mexico, which 

will be fostered using a model that complies with Mexico’s legal 

framework, determined by a study to be conducted jointly by the 

Financiera Rural and the International Development Bank. The new 

strategic plan also calls for the agency to fund any productive endeavor in 

the countryside, not only agricultural production. Activities could include 

such things as eco-tourism, rural gas stations, and transportation services. 

According to Financiera Rural officials, the guidance provided by the 

USAID fellow has positively contributed to Financiera Rural operations 

because funding and access to these types of resources and knowledge are 

not otherwise available in Mexico. Furthermore, the fellowship has 

provided support in trying to resolve the issue of limited credit 

availability—one of Mexico’s most significant structural problems. 

1

On the U.S. side, P4P is co-led by the Departments of State, Commerce, and Treasury. On 

the Mexican side, P4P is co-led on the Mexican side by the Office of the President and the 

Ministries of Economy, Foreign Relations, and Finance.
Appendix V

Recent U.S.–Mexico Collaborative 

Agricultural Activities under Partnership for 

Prosperity 

Page 86 GAO-05-272 International Trade

According to U.S. Embassy officials in Mexico, one of the most significant 

accomplishments under P4P has been the bilateral agreement to allow the 

Overseas Private Investment Corporation (OPIC) to operate and provide 

financing in Mexico. OPIC’s mission is to help U.S. businesses invest 

overseas, to foster economic development in new and emerging markets, 

and to complement the private sector in managing the risks associated with 

foreign direct investment. According to OPIC officials, for over 30 years 

there had been resistance by the Mexican government to allow the agency 

to operate in Mexico because of concerns over sovereignty. Mexico did not 

want a U.S. government agency to provide loans in Mexico because that 

would mean that the agency could ask for collateral and possibly own 

Mexican property in the case of default on a loan. However, in 2003, an 

agreement was reached through P4P to allow OPIC to operate in Mexico. 

Since the bilateral agreement was signed, OPIC has begun to provide 

financing for five projects in Mexico, including one related to agriculture. 

For the agriculture-related project, OPIC approved a $3.3 million loan to 

Southern Valley Fruit and Vegetable, Inc., of Georgia to develop a new 

farming project in Mexico that will serve as a winter division of the 

company that will grow, package, and ship cucumbers, squash, eggplant, 

and zucchini. The project will employ approximately 300 laborers and 

professionals in an area of high unemployment. Southern Valley has 

committed over $2.2 million in equity to the project. OPIC officials 

indicated that they expect their lending portfolio to grow in Mexico. 

USAID plans to expand its activities in Mexico to support rural 

development. USAID officials explained that, overall, USAID has not had a 

large presence in Mexico, and historically funding for activities in Mexico 

has been limited. Furthermore, USAID activities in Mexico have typically 

been in the areas of population, democracy, governance, health, and microfinancing, instead of agriculture. However, in 2004 USAID received an 

added $10.2 million specifically for rural development in Mexico, which 

brought its budget to $32 million. USAID is now working with other U.S. 

and Mexican agencies to develop projects to assist rural areas of Mexico. In 

recent months USAID has initiated several activities targeting rural 

development including: 

• Small Farmer Support/Rural Business Development: Through this 

activity, USAID award h is providing targeted business development and 

marketing services to agricultural producer organizations and 

cooperatives in the southern rural states of Oaxaca and Chiapas. 
Appendix V

Recent U.S.–Mexico Collaborative 

Agricultural Activities under Partnership for 

Prosperity 

Page 87 GAO-05-272 International Trade

• Connecting Small Producers with Market Opportunities: In partnership 

with Michigan State University and USDA, USAID launched this activity 

in late 2004 designed to allow small and medium producers to better 

compete for opportunities in the mushrooming domestic market for 

food and produce. 

• Rural Finance: In late 2004, USAID expanded what had been an urbanfocused micro-enterprise finance program to include rural finance as a 

priority activity. 

• University Partnerships: In 2004, USAID focused the ongoing Training, 

Internships, Exchanges, and Scholarships annual partnership 

competition on proposals that would spur agribusiness and other issues 

tied to rural economic growth. In August 2004, USAID awarded five new 

partnerships directly related to rural development.
Page 88 GAO-05-272 International Trade

Appendix VI

Comments from the U.S. Department of State ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VI

Comments from the U.S. Department of State

Page 89 GAO-05-272 International Trade

See comment 1.

See comment 2.
Appendix VI

Comments from the U.S. Department of State

Page 90 GAO-05-272 International Trade

See comment 4.

See comment 3.

See comment 5.

See comment 6.

See comment 7.
Appendix VI

Comments from the U.S. Department of State

Page 91 GAO-05-272 International Trade
Appendix VI

Comments from the U.S. Department of State

Page 92 GAO-05-272 International Trade
Appendix VI

Comments from the U.S. Department of State

Page 93 GAO-05-272 International Trade

The following are GAO’s comments on the State Department’s letter dated 

March 16, 2005.

GAO Comments 1. We revised title to make clear that we are not suggesting that Mexico 

has failed to implement its obligations under NAFTA’s agricultural 

provisions.

2. We do not believe that we overstate the opposition to NAFTA in 

Mexico. As noted in the report, U.S. and Mexican officials have 

expressed concerns about how negative perceptions of NAFTA may 

impact successful implementation of the agreement. In addition, the 

report recalls the difficulties experienced in Mexico at the time of 

tariffs elimination under NAFTA in 2003.

3. We changed language in the two locations of the report cited by the 

State Department to clarify that as a matter of course the United States 

has not committed to providing technical assistance to its post-NAFTA 

free trade partners. The report now states simply that the United States 

has recently provided such assistance.

4. The points about the P4P Initiative noted by the State Department are 

also mentioned in our report. We did not consider it necessary to make 

revisions to address these points.

5. In our recommendations we identify the Secretary of State as the head 

of one of the agencies taking the lead on P4P activities. We have added 

a footnote in appendix V on P4P activities to clarify the roles of the 

Departments of Commerce and Treasury. While these departments also 

have a leading role in P4P activities, they are not directly involved in 

activities related to rural development or the agricultural sector, and 

therefore our recommendation is not addressed to these agencies.

6. Our review was concluded by the time the Partnership for Prosperity 

working groups cited by the State Department had taken place. These 

developments may represent the first steps in addressing our 

recommendation.

7. We revised appendix V of the report to include key elements of the 

information provided on recent USAID activities.
Page 94 GAO-05-272 International Trade

Appendix VII

Comments from the U.S. Department of 

Agriculture ApendxiVI
Appendix VII

Comments from the U.S. Department of 

Agriculture

Page 95 GAO-05-272 International Trade
Page 96 GAO-05-272 International Trade

Appendix VIII

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts Christine Broderick, (415) 904-2240

Juan Gobel, (213) 8301-031

Acknowledgments In addition to those listed above, Ming Chen, Francisco Enriquez, Matthew 

Helm, Sona Kalapura, Jamie McDonald, Marisela Perez, and Jonathan Rose 

made key contributions to this report.

(320246)
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