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Abstract

The United States is interested in establishing preferential trading arrangements (PTAs). Economic motivation for establishing PTAs includes moving toward freer trade, increasing economies of scale, improving patterns of consumption, and increasing investments from third countries. However, economic theory does not show unambiguously that countries or specific sectors of countries will be better off by establishing a PTA. The unique factors of each case must be examined to determine the effect of a PTA on the distribution of gains and losses. This report presents a modeling framework that evaluates the effect of a PTA on the agricultural sectors of participating countries. A database that can be used with the model to examine the agricultural implications of a PTA between Mexico and the United States is also presented.

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