Sanitary and Phytosanitary (SPS) regulations are designed to impede the unintentional movement of pests. In an attempt to reduce concerns about the use of SPS regulations as hidden barriers to trade, the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) mandate their members to enact SPS regulations based exclusively on biological scientific merit, under an open regulatory process. However, there are some concerns among American officials about the possibility that Mexico may have enacted stricter-than-necessary SPS regulations to compensate for tariff reductions imposed by NAFTA. A political economy analysis of the enactment of SPS regulations in Mexico suggests that Mexico has not systematically enacted SPS regulations as compensation for tariff reductions. Institutional changes, new regulatory procedures, and political commitment, have reduced the possibility that Mexico enacts economically protectionist SPS regulations, forcing vulnerable domestic industries to seek for other primary sources of protection such as labeling requirements and anti-dumping investigations. In spite of such an improvement, Mexico has enacted some controversial SPS regulations. However, they were enacted not as a compensation for tariff reductions but mainly in retaliation for what Mexican officials perceived as American protectionist SPS regulations such as the former U.S. ban on Mexican avocados (denoted as the avocado case). Mexican avocados are currently allowed to enter the country under a systems approach. The systems approach consists in several steps which successively reduce the probability of pest infestation. The last of these steps restricts imports only to the northeastern states of the U.S. A cost-benefit analysis (CBA) is applied to investigate the adequacy of the former U.S. ban on Mexican avocados, as well as the limited trade regulation which has replaced it. The analysis departs from previous deterministic CBA of SPS regulations by taking into account the uncertain nature of pest infestations. The stochastic CBA suggests that the limited trade regulation currently in place is suboptimal. By applying a systems approach only inside Mexico ( allowing the free trade of pest-treated avocados), welfare gains with a marginal increase in risk would have been expected. / Ph. D.