THE UNCERTAIN FUTURE OF THE MEXICAN MARKET FOR U.S. COTTON: IMPACT OF THE ELIMINATION OF TEXTILE AND CLOTHING QUOTAS

Western Economics Forum, April 2004

Nevertheless, the elimination of the U.S. quotas will still leave the U.S. T&C tariffs (around 15% for
countries other than Mexico) to be reduced within the framework of the current WTO negotiations
implying future additional reductions on U.S. T&C import prices and a further decline of Mexican cotton
imports. Moreover, although not holding T&C quotas, Mexico’s domestic market may be also affected
by the inflow of Asian imports if Mexican tariffs are to be reduced. With minor modifications the
estimated model could serve to estimate the impact of those eventual scenarios on the future of the
U.S. cotton exports to Mexico. Furthermore, the model could also be utilized to assess the effects on
cotton supply and imports of eventual Mexican policy changes directed to encourage cotton production.
(e.g., subsidies on fertilizer prices and pest control).

References

Food and Agricultural Policy Research Institute (FAPRI). 2003 U.S. and World Agricultural Outlook.
Staff Report 1-03. Ames, IA, January 2003.

Instituto Nacional de Estad^stica, Geografta e Informatica (INEGI), “La Industria Textil y del Vestido en
Mexico 2002.” No. 15, 2002.

Lopez, J. E. “An Econometric and Simulation Model of the Mexican Cotton Industry.” M.S. Thesis,
Texas Tech University, Lubbock, Texas, 2003.

Malaga J. and S. Mohanty. “Agreement on Textiles and Clothing: Is It a WTO Failure?” Journal of
International Law and Trade Policy, 4 (1): 75-85, June 2003.

Mexican Ministry of Economy, The Representative Office for Europe. The Textile and Clothing Industry
in Mexico. Brussels , Belgium, 2002.

United States Department of Agriculture (USDA), Economic Research Service web site. Foreign
Agricultural Trade of the United States (FATUS) Report. Available at:
http://www.ers.usda.gov/data/FATUS.

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