WELFARE ANALYSIS of the U.S.-MEXICAN TOMATO SUSPENSION AGREEMENT

This study develops a three-county trade model of the United States, Mexico, and Canada to analyze the effects of the 2013 Suspension Agreement on prices, production, consumption, trade flows, and welfare in each country. Although only the United States and Mexico are signatories to the agreement, Canada was also included because the U.S. minimum price distorts prices across the region. Three tomato categories - field, greenhouse, and cherry and grape - are studied because each has a distinct minimum price. The overall welfare effects are positive for Mexico and Canada, but negative for the United States.