Transcript New Trade Negotiations What’s In It For Texas Agriculture?

AAEA Annual Meetings
Denver, CO
August 1-4, 2004
DR-CAFTA & Australia Trade Agreement:
Issues & Implications for U.S. Agriculture
Parr Rosson
Professor & Director
Center for North American Studies
Texas A&M University
C
NAS
Why Regional Agreements?

2d Best Solution After MTN
–
–
–

Slow Progress in WTO
Cancun Ministerial Derailed Progress
FTAA ‘Lite’ Not As Appealing
Economic Incentives
–
–
–
Open Markets
Increase Business Efficiency
Create Economies of Scale
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NAS
Strategic Considerations
Support Democracy in Latin America?
 Reduce Illegal Immigration?
 Secure Strategic Materials?

–
–

Oil/Natural Gas
Fertilizer
Create Buffer Against Terrorism?
–
‘Seam State’ Argument, Tom Barnett, U.S.
Naval War College
NAS
C
CUSTA, ‘89
NAFTA ‘94
DR-CAFTA Jordan ‘03 Bahrain ‘04
Israel ‘85
‘04 Morocco ‘04
Thailand ‘05
Panama ‘05
Andean FTA
05
Chile ‘04
FTAA ‘06
Singapore ‘03
Southern African
Customs Union ‘05
Australia ‘04
U.S. Trade Agreements-3d Largest Market
U.S. Average Tariff, 1789-2002
70
Percent
70
Tariff of Abominations, 1828
Smoot-Hawley Tariff, 1930
60
60
Morrill Act, 1861
50
50
Generalized System
of Preferences, 1968
40
30
WTO,
1995
20
10
40
30
20
Fordney-McCumber
Tariff, 1922
10
GATT, 1947
0
1789
1789 1816 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Statistical Abstract of the United States
0
World Average Agricultural Tariffs, 2000
Percent
140
Bound Average
World Average
115
120
100
85
80
62%
55
60
40
20
0
40
30
25
12
DR-Central
American Free
Trade Agreement
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Mexico
Houston,
1,300 Miles
NW
Dominican
Republic,
800 Miles
NE
Separate
Agreement with
United States
North
DR-CAFTA Demographics
Costa Rica
Pop.
(mil)
3.9
$8,300
El Salvador
6.5
$4,600
Country
Guatemala
GDP/
Person
13.9 $3,900
Honduras
6.7
$2,500
Nicaragua
5.1
$2,200
Dom. Rep.
8.7 $6,300
Total/Avg. 44.8 $4,633
Poverty
%
20.6
Lit.
%
96
Ag. Pop.
%
20
48
75
53
50
80.2
30
70.6
76.1
67.5
50
34
42
25
84.7
17
45.3
79.2
32.2
DR-CAFTA

About ½ of Markets Open to U.S.
Agriculture When Implemented
–
Opportunities for HQ Beef, Cotton, Wheat,
Soybeans
Rest of Market Access Over 15-20
Years: Pork, Beef, Poultry, Corn, Rice,
Dairy (18 & 20 Years, resp.)
 U.S. Allows Minimal Access for Sugar
(99 tmt to 140 tmt, 100% Duty)

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NAS
U.S. Ag Trade with DR-CAFTA, 2003
Million Dollars
$865
$1000
Exports
$763
Imports
Balance
$800
$442
$600
$400
$349
$242
$238
$105$133
$200 $221
$200
$0
-$21
-$200
-$400
-$600
-$414
-$623
-$800
Source: Foreign Trade Statistics, U.S. Census Bureau
$95 $114
-$19
$280
$162
U.S. Agricultural Exports to
Central America
Total, 1990: $483 million
Total, 2003: $1,339 million
Grains & Feeds
$218
Grains & Feeds
$582
Other
$47
Oilseeds
$260
Other
$129
Beverages
$37
Oilseeds
$90
Animals
$47
Veg/Fruit
$44
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Animals
$204
Cotton
$47
Veg/Fruit
$117
U.S. Agricultural Imports from
Central America
Total, 1990: $1,566 million
Fruit/Veg.
$133
Bananas
$453
Total, 2003: $2,654 million
Fruit/Veg
$527
Fish
$211
Bananas
$674
Other Fish
$264 $478
Coffee
$372
Sugar
$133
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Other
$328
Coffee
$459
Sugar
$188
Melon Tariff Phase-Out
 US Tariffs
Eliminated Immediately
 Most CA Tariffs Eliminated
Immediately
 Exception: Dominican Republic May
Impose 20% Safeguard Duties
– 5 Years for Watermelon
– 10 Years for Other Melons
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Onion Tariff Phase-Out
 US Tariffs
Eliminated
Immediately
 CA Tariffs Eliminated Over
10 to 15 Years
 All But El Salvador Have
Some Type of Safeguard or
Tariff-Rate Quota
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NAS
CAFTA Base Tariffs
for Yellow & White Onions
Percent
120
97
100
80
60
47
40
15
15
15
15
20
0
Costa Rica*
El Salvador
* Denotes Tariff-Rate Quota
Guatemala
Honduras
Nicaragua
Dom. Rep.
CAFTA Phase-Out Period
for Yellow & White Onions
Years
18
16
15
14
15
15
15
12
12
10
10
8
6
4
2
0
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Dom. Rep.
Monthly U.S. Onion Shipments and Imports
500
Million Pounds
Other U.S.
$/CWT
Texas
Mexico
CAFTA
Other Imports
50
US Price
400
40
300
30
200
20
100
10
0
Source: Agricultural Marketing Service, USDA
0
Monthly U.S. Watermelon Shipments and Imports
Million Pounds
Cents/Pound, Various Red
800
0.5
Texas
Other U.S.
CAFTA
Mexico
US Price
0.4
600
0.3
400
0.2
200
0.1
0
Source: Agricultural Marketing Service, USDA
0
Monthly U.S. Cantaloupe Shipments and Imports
400
Million Pounds
Texas
Other U.S.
$/CWT
CAFTA
Mexico
US Price
30
25
300
20
200
15
10
100
5
0
Source: Agricultural Marketing Service, USDA
0
Monthly U.S. Honeydew Shipments and Imports
100
Million Pounds
Texas
Other US
$ per 2/3 Carton of 6s
CAFTA
Mexico
20
US Price
80
15
60
10
40
5
20
0
Source: Agricultural Marketing Service, USDA
0
Australia Trade
Agreement
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Australia Trade Agreement

Australia Will Eliminate All Tariffs
Immediately
 US Fruits/Vegetables Have Price
Safeguards
 US Beef Has 18 Year TRQ
– Price Trigger Safeguard Indefinitely

US Dairy Has 18 Year Tariff-Rate Quotas
– Affects Cheeses, Milk Powder & Ice Cream

US Cotton & Peanuts Have 18 Year TRQ
 US Sugar Grants No Additional Access
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NAS
U.S.-Australia Agricultural Trade, 1990-2003
Million U.S. Dollars
$800
$612
$400 $226
$283
$273
$409
$332
$339
$322
$353
$329
$319
$317
$290
$338
$0
-$400
-$578
-$800
-$603
-$742
-$808
-$850 -$855
-$898
-$948
-$956
-$958
-$987
-$1,107 -$1,074
-$1,137
-$1,174 -$1,180
-$1,277 -$1,276
-$834
-$1,200
-$511 -$533
-$1,467
-$1,600
-$1,592
U.S. Exports
U.S. Imports
Balance
-$1,556 -$1,508
-$1,757
-$2,000
-$1,894
-$2,120
-$2,400
1990
1991
1992
1993
1994
1995
1996
1997
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
1998
1999
2000
2001
2002
2003
U.S. Agricultural Trade with Australia, 2003
Total Exports: $612 Million
Total Imports: $2,120 Million
Animal Products
60.6%
Animals
37.9%
Oilseeds
21.2%
$1,174
$232
$130
$111
$44
Hort
18.1%
Grains
7.2%
$627
$95
Other
15.5%
Bev
29.5%
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Sugar
Other
Hort 2.1%
2.8%
2.8%
Grains
2.2%
Conclusions
 U.S.
Market Much More Open than
Other Countries
 With Trade Agreements, Tariffs Will
Fall, U.S. Access to Markets Will
Increase
 More Import Competition in Some
U.S. Sectors
 Opportunity for Input On Agreements
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NAS
Concerns & Issues
 Are
More Trade Agreements A
Desirable Outcome?
– Supranational Authority?

Without Trade Agreements, U.S.
Market Access Limited
–

Even With Agreements, No Guarantee of Market
Growth
Investment & Economic Development
Crucial for Central America & Many
Others
NAS
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Concerns & Issues
 Australian Wheat
Board Not Disciplined
 Concerns About Impacts of ‘Manufacturing
Beef’ Imports from Australia on U.S. Cull
Cow Prices
 SPS Not Satisfactorily Addressed in
Australia Agreement
 Creative Destruction of Trade Agreements
– How to Mitigate Negative Impacts?
C
NAS
Center for North American Studies
C
NAS
“Informed Decisions for Global
Change”
Parr Rosson
Ph: 979-845-3070
E-mail: prosson@tamu.edu