Effect of liberalized U.S.Mexico rice trade: A spatial, multiproduct equilibrium analysis
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A spatial, multiproduct equilibrium model featuring United States-Mexico long-grain rice trade is developed to determine the effect of removing Mexicos rice tariffs in 2003 on U.S. rough and milled rice exports to that country. Analysis considers rice milling costs and yields in the United States and Mexico, transportation costs associated with U.S. rice exports to Mexico, mill by-product prices in Mexico and the United States and the changing tariff levels. Results show Mexicos graduated decline in rice tariffs over the 1997 to 2003 period to increase U.S. rice exports to Mexico about 1% per year or a total of 7% over the 6-year period. United States long-grain rice price and production is modestly affected by the increased exports, while the impact on Mexicos rice production and price is comparatively large. Further, results show the historic incentive to export rough rice to Mexico will be replaced by an incentive to export milled rice, thus opportunities for the U.S. rice milling industry to form alliances with Mexican packers and increase direct relationships with large retailers in Mexico. [EconLit citations: C61, Q17, and R40.] 2003 Wiley Periodicals, Inc.
