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suiting from the NAFTA agreement will boost income and stimulate demand for 

 larger amounts and more diverse food and feed products. In addition, Mexico's com- 

 parative advantages suggest it will continue to be a net importer of food, feed, and 

 fiber. 



• Expands high-value trade — Primarily a bulk commodity market prior to 1987, 

 Mexico is now one of the United States' largest and fastest growing high-value mar- 

 kets. High-value products now account for almost 70 percent of all U.S. agricultural 

 sales to Mexico compared to 40 percent in 1987. 



• Increases production efficiency — NAFTA will lead to efficiency gains in both 

 Mexico and the United States as producers respond to market opportunities. U.S. 

 agriculture will benefit from trade creation, higher agricultural export prices, and 

 increases in economic efficiency and productivity. 



• Increases U.S. agricultural exports and farm cash receipts — By the end of the 

 15-year transition period, annual U.S. agricultural exports will likely be $2.0 to $2.5 

 billion higher than without NAFTA. Over the same period, annual U.S. farm cash 

 receipts are expected to increase by about 3 percent compared with projected re- 

 ceipts without NAFTA. More agricultural trade will also expand employment in re- 

 lated areas of processing and transportation and the economy as a whole. Because 

 some of the largest U.S. export increases are expected for income supported com- 

 modities, NAFTA is also expected to reduce farmprogram spending. 



• Maintains the integrity of U.S. standards — The U.S. will maintain its stringent 

 standards regarding health, safety, and the environment and its right to prohibit 

 imports that do not meet U.S. standards. NAFTA also allows States and local gov- 

 ernments to enact standards without restriction, as long as these standards are sci- 

 entifically defensible. The U.S. will take great care to make sure that chemicals 

 legal in Mexico but illegal in the United States will not be present in imports. 

 NAFTA allows each country to continue to develop grade standards to meet the 

 marketing rules of its agricultural industry and ensure that consumers receive a 

 product of acceptable quality. 



• Provides stronger protection for agricultural inventions, patents, and tech- 

 nologies — The United States is a leader in the field of biotechnology, including the 

 development of new varieties of plants. U.S. companies spend substantial amounts 

 every year in the development of new plant varieties and processes that keep Amer- 

 ican agriculture efficient. Provisions in the NAFTA's intellectual property rights text 

 will help these companies to recoup the costs of their investments and protect their 

 interests. 



• Facilitates investments in agriculture — NAFTA enables U.S. firms to establish 

 new agricultural enterprises and to acquire existing businesses in both Mexico and 

 Canada and to receive the same treatment, with limited exceptions, as domestic 

 companies in either country. The agreement also gives U.S. investors in Mexico and 

 Canada full rights to repatriate all profits and capital flows. NAFTA will further 

 stimulate investment and opportunities of U.S. food processing affiliates in Mexico. 

 NAFTA's elimination of Mexico's local content requirements for manufacturers will 

 increase the demand for products from the United States. 



• Benefits agricultural transportation — Under NAFTA, Mexico's market for inter- 

 national truck and rail transport will be opened and Canada's transportation mar- 

 ket for U.S. firms, which is already open, will be locked in. 



CONCLUSION 



Basically NAFTA means a bigger and more lucrative market for U.S. farmers and 

 ranchers. It means expanded access to 92 million consumers south of the border. 

 As Mexico's economy grows, it should also lead to sales of greater amounts and a 

 greater diversity of U.S. food and feed products. 



USDA is projecting that by the end of the 15-year transition period for NAFTA, 

 annual U.S. agricultural exports will likely be $2.0 billion to $2.5 trillion higher than 

 without the agreement. Over the same period, U.S. farm cash receipts will increase 

 by 3 percent compared with projected receipts without NAFTA. More agricultural 

 trade will also expand employment in related sectors — like processing and transpor- 

 tation — and the U.S. economy as a whole. 



Thank you, Mr. Chairman, for the opportunity to stress the positive aspects of 

 NAFTA with regard to American agriculture, and present NASDA's support for the 

 treaty. I look forward to working with this committee on this and other important 

 trade matters facing Congress. I will be happy to answer any questions you may 

 have. 



