The implementation of the North American Free Trade Agreement (NAFTA) on January 1, 1994 signaled the economic integration of Canada, the United States, and Mexico. The economic theory behind international trade suggests the free flow of goods allows each nation to focus on comparative advantages, therefore permitting all parties involved to consume more goods of a better quality and at a lower price. The purpose of this study was to determine how agricultural trade patterns for Canada, the United States, and Mexico changed in terms of composition, value, and volume since the implementation of NAFTA. As several studies included suggest, Canada and the United States exhibit a comparative advantage in the production of eggs, maize, milk, beef, and wheat, and Mexico tends to exhibit a comparative advantage in the production of horticultural products such as asparagus, beans, chilies, cucumbers, eggplants, grapes, onions, pumpkins, strawberries, tomatoes, and watermelons. With this information in mind, this study sought to analyze whether or not NAFTA prompted each nation to specialize in the production of products for which they have a comparative advantage, thus the focus on the changing composition of agricultural trade. Additionally, this study attempted to determine if and when structural breaks in the trade patterns for the selected products happened (both in terms of value and volume). If the structural break happened before the implementation of NAFTA, then it may be suggested that the rising trade levels are simply the continuation of an already existing upward trend that may have started during the 1980’s. If the structural break happened around the time NAFTA was implemented, then there may be some evidence that NAFTA in particular propelled this increase in agricultural trade levels. This study relied on data provided by the Food and Agriculture Organization of the United Nations (FAOSTAT). Specifically, this analysis used international trade data, in terms of value and volume, for Canada, the United States, and Mexico for sixteen agricultural products from 1961 to 2011. The methodology consisted of various multiple regression models designed to detect a structural break in value and volume trends over time. The results suggest that most products exhibited a positive value and volume structural break in 1994, when NAFTA was put in place. Various products showed evidence of a different break date, but this break date tended to be in the mid 1980’s. This is not surprising given that Mexico’s economic liberalization began during this decade with its accession into the General Agreement on Tariffs and Trade (GATT) in 1986 and considering the 1988 Free Trade Agreement (FTA) between Canada and the United States.
