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Abstract

Under the North American Free Trade Agreement (NAFTA) tariffs on U.S. potato imports to Mexico were phased out by 1993. Citing phytosanitary issues, in 1996, the Mexican government placed quantitative restrictions on U.S. potato imports and restricted their import only to designated border areas. This article estimates the welfare cost of restricting U.S. potato imports into Mexico. We find that removing trade restrictions may lead to over 1.8 million tons of new imports into Mexico, a gain of consumer surplus of 4.0 billion pesos per year, and a loss of 2.9 billion pesos of producer surplus.

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