Free trade with Mexico: economic impacts

Economic models show that the U.S. will benefit economically from a free trade agreement (FTA), but Mexico is likely to benefit more. The creation of an FTA will result in the movement of labor and capital across sectors in both economies. The benefits to Mexico will be augmented if significant economic development occurs as a result of the agreement. The FTA is likely to cause a reduction or change in the mix of California horticultural products directly competitive with Mexico. (See sidebar, p. 7.) Market opportunities are expected to develop for other products.