Contribution of the nafta countries in the Japanese pork market

Abstract

The entrance of Mexico to the GATT in 1986 diminished consider ably the import barriers, and in particular produced a continuously increasing commercial exchange with Japan. In fact, later in 2005 Mexico and Japan signed an Economic Complementarity Agreement.  Japan is an important pork meat consumer and has recently paid high prices for quality meat. On the other hand, nafta countries are important purveyors of the meat import market of Japan. The object of this work is to determine the competitiveness of the different nafta coun tries in meat import market of Japan. Our analysis covers the period from 1998 to 2012. We employed a non-linear Source Differentiated Almost Ideal Demand System (sdaids) to estimate the elasticities of the corresponding demand functions. The significance tests were realized using Chalfant’s procedure. We obtained positive expenditure elasticities as expected. However, in the case of Mexico and usa the elasticities turned out to be less than 1, while the expenditure elasticity for the Rest of the World is greater than 1. This shows that pork meat imports from other countries are more sensible to changes in expenditure. We conclude that Mexico has an important opportunity to expand his exports of pork meat to Japan.