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Abstract

Most trade barriers are, by their very nature, bi-lateral. Since most countries trade with more than one country in more than one product, these bilateral measures can have spillover effects, changing trading patterns among other countries and products. This paper looks at the effect of a bilateral trade barrier on trade flows within a three-country free-trading area. Specifically, this paper examines the trade distortion effects of the 1996 voluntary export restraint (VER) placed on tomato exports from Mexico to the United States. Has Mexico shifted its exports from the Unites States to Canada, and has Canada increased its exports to the United States? Has the VER caused Mexico to divert fresh tomatoes to the processing sector?

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