MAIZE AND THE FREE-TRADE AGREEMENT BETWEEN MEXICO AND THE UNITED-STATES

Setting the price of maize in rural Mexico above the world price is inefficient and likely to have negative distributional effects because many subsistence producers, and all landless workers, are net buyers; in fact it screens out the relatively poor rather than the relatively rich. The policy objective, therefore, should be to move toward free trade. This would yield large gains in efficiency. The Free Trade Agreement provides an ideal opportunity to pursue this objective. It will provide freer entrance into the United States for other agricultural products as well as a broad range of manufactured products. Insuring secure and sustained access for labor-intensive agricultural and manufactured products can help ease the impact on the labor market of a transition away from subsistence maize cultivation.