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

Texas Agricultural Forum
Waco, Texas
January 21, 2004
New Trade Negotiations:
What’s at Stake For Texas Agriculture?
Parr Rosson
Center for North American Studies
Department of Agricultural Economics
Texas A&M University
C
NAS
What’s at Stake?
 Market Access
 Secure
Sources of Raw Materials &
Inputs
 Gains & Losses to Trade
 Adjustment for Some Sectors
U.S. Trade Negotiations
 GATT
1947-94
 US/Israel 1985
 Uruguay Round 1986-93 (GATT)
 Canada 1989
 NAFTA 1994 (Year 10)
 Doha Round 2000-05? (WTO)
 3 Regionals Completed in 2002/03
 6 Regionals Pending
CUSTA, ‘89
NAFTA ‘94
CAFTA ‘05
Jordan ‘03 Bahrain
Morocco ‘06
Chile ‘04
FTAA ‘06
Israel ‘85
Singapore ‘03
Southern African
Customs Union ‘06
U.S. Trade Agreements
Australia ‘05
U.S. Agricultural Trade, 1970-2003 E
$70
Billion Dollars
Imports
Exports
$60
$50
Trade Surplus
Exports
$40
$30
$20
Imports
$10
$0
1970 72
74
76
78
80
82
84
86
88
90
92
94
96
98 2000 2003 E
US Agricultural Trade with NAFTA
Billion US Dollars
US Exports
$20
US Imports
Trade Balance
NAFTA Became
Effective
$15
$10
$13$13
$9 $9
$9
$10
$14$14
$13
$12
$12
$12
$12
$11
$16$16
$16
$15
$8
$8
$7
$6
$5
$2
$2
$2
$1
$0
$0
$1
-$0
$0
$0
-$0
-$5
1990-92 1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
$0
World Trade Organization
“Doha Development Agenda”
Attempt to Restart is Underway
 ‘Common Sense’ Letter, 1/12/04
 Export Subsidies, Trade Distorting
Policies & Cotton/Cotton Textiles
 Retaining Protection of the Peace Clause
Important for U.S. Agriculture & Open
Markets

Market Access
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
GATT, 1947
0
1789 1816 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Statistical Abstract of the United States
10
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
Bound Tariffs for Selected Products
Percent
100
86
86
86
86
86
80
55
54
60
50
46
40
39
40
50
25
39
25
37
42
23
19
18
20
0
Total
South America
Source: ERS/USDA
Grains
Grain Products
Central America
Feed
Caribbean Islands
Oilseeds
North America
Bound
Tariffs
for
Selected
Products
Percent
100
91
88
86
90
90
87 85
80
80
68
68
55
60
49
48
43
40
43
41
41
43
34
21
20
0
Live Animals
South America
Source: ERS/USDA
Meat Fresh
Meat Frozen Meat Prepared
Central America
Caribbean Islands
Dairy
North America
New Agreements
Chile
Effective January 1, 2004
 Tariffs Eliminated Immediately, or Over
4, 8, 10 or 12 Years
 Chile’s Price Band System on Wheat,
Vegetable Oils, & Sugar Eliminated
 U.S. Receives Preferential Access
Compared to Canada & European Union
 U.S. Export Impacts Small (18-52%)
 U.S. Import Impacts Small (6-14%)

U.S.-Chile Agricultural Trade, 1990 - 2002
$1,500
Billion U.S. Dollars
$1,154
$1,027 $1,023
$910
$1,000
$751
$500
$481
$63
$445
$72
$495
$94
$457
$109
$543
$103
$745
$784
$547
$169
$126
$126
$135
$152
$116
$98
$111
$0
-$500
-$348
-$378
-$418 -$374 -$401
-$441
-$625 -$619 -$648
-$758
-$1,000
-$910 -$924
-$1,043
U.S. Exports
U.S. Imports
Balance
-$1,500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Chile's Access to U.S. Market
Immediate
4 Years
10 Years
Pork
Some Fruits
Some Vegetables
Some Tree Nuts
Wheat
Corn
Rice
Other Grains
Wheat Flour
Soybeans/Products
*Cotton
Some Sugar/Products
*Beef, with TRQ
Some Fruits
Some Vegetables
Some Tree Nuts
Poultry, with TRQ
8 Years
12 Years
Some Fruits
Some Vegetables
Some Processed Foods
Some Fresh Vegetables
Dairy, with TRQ
Tobacco, with TRQ
Some Sugar/Products, with TRQ
Some Processed Foods
U.S. Access to Chile
Immediate
4 Years
10 Years
Pork
Fresh Fruits
Fresh Vegetables
Tree Nuts
Other Grains
Soybeans/Products
*Cotton
Tobacco
*Beef, with TRQ
Chicken, Whole
Some Dairy
*Corn (2 Years)
Chicken Parts,
with TRQ
8 Years
Some Dairy
12 Years
Wheat
Rice
Wheat Flour
Vegetable Oils
Sugar/Products
Processed Foods
U.S. Agricultural Exports to Chile, 2002
Total: $111.1 Million
Food Preps
9.0%
Wheat
16.3%
Animal Feed
6.6%
Rice
6.1%
Cotton
4.2%
Saps/Thickeners
3.2% Seeds
3.2%
Corn
3.0%
$10.0
$7.3
$18.1
$6.8
$4.7
$3.6
$3.5
$3.3
$19.9
Corn Gluten
17.9%
$33.9
Other
30.5%
U.S. Agricultural Imports from Chile, 2002
Total: $1,154 Million
Grape Wines
11.9%
Stone Fruit
9.4%
Corn
7.1%
$136.9
$108.7
$82.2
$81.5
Avocados
7.1%
$464.1
$55.5
Grapes
40.2%
$52.8
Fruit Juices
4.8%
Apples/Pears
4.6%
Kiwi/Berries
3.4%
$39.3
$132.6
Other
11.5%
Central America Free
Trade Agreement
CAFTA
WHO so Far? El Salvador,
Guatemala, Honduras, Nicaragua
 Costa Rica & Dominican Republic to
be Added w/in Months


About ½ of Markets Open to U.S.
Agriculture When Implemented (Jan.
2005)??
–

HQ Beef, Cotton, Wheat, Soybeans
Rest Over 15-20 Years: Pork, Beef,
Poultry, Rice, Corn, Dairy
Mexico
North
Houston,
1,300 Miles
NW
Dominican
Republic,
800 Miles
NE
CAFTA Demographics
Costa Rica
Pop.
(mil)
3.9
$8,300
El Salvador
6.5
$4,600
Guatemala
13.9
$3,900
Honduras
6.7
$2,500
Nicaragua
5.1
$2,200
Dom. Rep.
8.7 $6,300
Country
GDP/
Person
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
U.S. Agricultural Trade with Central America
Billion Dollars
Exports
Imports
$2.5
Trade Balance
$2.2
$2.0
$2.1
$1.9
$1.8
$2.0
$1.3
$1.4
$1.5
$0.5
$0.6 $0.6
$1.9
$2.0
$1.6 $1.6
$1.3
$1.5
$1.0
$2.1
$0.7
$0.9
$0.8
$1.0 $1.0
$1.1 $1.1
$1.2
$1.3
$0.5
$0.0
-$0.5
-$0.8 -$0.8
-$1.0
-$0.9 -$0.9
-$0.8
-$0.9
-$0.7 -$0.7
-$0.8 -$0.8
-$1.0
-$1.0
-$1.2
-$1.5
1990
1995
2000
2002
U.S. Agricultural Exports to Central
America
Total, 1990: $482 million
Total, 2000: $1118 million
Grains & Feeds
$217
Oilseeds
$90
Other
$69
Oilseeds
$194
Vegetables
Tobacco $27
Animals $33
$47
Grains & Feeds
$422
Rice
$56
Other
$196
Animals
$162
Vegetables
$89
U.S. Rice Exports, 1993 and 2002
Thousand Metric Tons
1993 Total: 2,860 TMT
1,000
2002 Total: 3,809 TMT
897
691
800
625 620
573
600
481
419 417
407
400
200
324 315
266
112
99
88
65
0
1993
N Amer.
C Amer.
2002
Asia
W Europe
Carib.
Source: Foreign Agricultural Service, USDA, www.fas.usda.gov/ustrade
Mid East
Africa
S Amer.
U.S. Agricultural Imports from
Central America
Total, 2000: $2977 million
Total, 1990: $1699 million
Fish
Coffee
Shellfish
Bananas
$732
Sugar $159 $211
Coffee $611
$133
$372
Fish
$478
Other
$742
Bananas
$453 Shellfish
$368
Fruits
$274
Other
$1361
Free Trade Area of the
Americas
FTAA
Open Markets in Western Hemisphere
– Average US Ag. Tariffs 12%
– South America: 40%
– Caribbean: 85%
 Negotiations Moving Forward, But
Slower than Expected: Brazil a Sticking
Point
 Target Date for Completion 1/05
 Target Date for Implementation 1/06

U.S. Agricultural Trade with South America
Billion Dollars
Exports
Trade Balance
$6.0
$3.9
$3.7
$3.8
Imports
$5.4
$3.6
$2.3
$2.0
$1.1
$1.2
$4.8
$4.2
$4.0
$1.4
$4.9
$4.8
$4.1
$5.3
$1.5
$1.8
$2.6
$2.7
$2.6
$1.8
$1.7
$0.0
-$2.0
-$2.1 -$2.3 -$1.9 -$2.2
-$2.3
-$2.5 -$2.4
-$2.7
-$2.8
-$3.5
-$3.1
-$4.0
1990
1995
2000
U.S. Agricultural Exports to South America
Total, 1990: $1062 million
Grains
$575
Total, 2000: $1706 million
Oilseeds
$230
Grains
$711
Animals
$197
Oilseeds
$141
Animals
$131
Other
$96
Cotton
Vegetables $141
$59
Rice
$62
Other
$305
Source: Foreign Agricultural Trade of The United States , Calendar Year, USDA/ERS
Vegetables
$122
U.S. Agricultural Imports from
South America
Total, 1990: $5179 million
Other
$3288
Total, 2000: $6847 million
Shellfish
$657
Bananas
$487
Sugar Prod.
$279
Fruits
$742
Fish
$1410
Bananas
$449
Coffee
$799
Fish
$788
Shellfish
$491
Fruit Juices
$644
Coffee
$851
Other
$4487
Source: Foreign Agricultural Trade of The United States , Calendar Year, USDA/ERS
Raw Materials & Inputs
U.S. Oil Imports by Source
NAFTA
14.00
Non-OPEC (Ex. NAFTA)
12.03
11.02
10.16
10.00
8.02
8.00
11.46
Million Barrels/Day (Avg.)
12.00
OPEC
8.33
8.84
7.71
6.91
5.07
6.00
4.00
2.00
0.00
1980
1985
1990
1993 NAFTA 1995
1997
2000
2001
2002
Petroleum Imports by Country of Origin, 1960-2001. USDOE, EIA, Annual & Monthly Reports
U.S. Fertilizer Imports
Canada
20.0
W. Europe
ROW
18.1
16.6
Million Metric Tons
13.6 13.7 13.9
15.0
14.6
17.0
15.3 14.9
12.2
10.8 10.8 10.4
10.0
5.0
0.0
1990
USDA, FAS
1993
1995
2000
2002
U.S. Fertilizer Imports from ROW
Annual Average 1990-92
250
226
1,000 Metric Tons
200
193
200
150
100
50
0
117
117
111
U.S. Fertilizer Imports from Row, 2002
1600
1400
1291
1,000 Metric Tons
1,000 Metric Tons
1200
1000
800
600
400
200
0
438
394
289
216
178
160
88
72
31
Gains to Trade
Exports, Imports, Farm Income
U.S. Agricultural Exports to W.H.
Countries Up 8% After Full PhaseIn to $600 million
 U.S. Agricultural Imports from W.H.
Countries Up 6% to $850 Million
 U.S. Farm Income Up $200
Million/Year

ERS, USDA, 2000.
Sector Impacts
More Exports of Corn, Soybeans,
Cotton
 More Imports/Competition for
Sugar, Peanuts, Citrus, Some
Vegetables
 FTAA Likely to $4.0 Billion to U.S.
GDP/Year

ERS, USDA, 2000.
So What for Texas?
More Exports & Potential for Higher
Prices
 Access to Lower Cost Inputs
 More Competition in Some Sectors
– Sugar, Peanuts, Textiles, Maybe
Cotton
– Meats-But Sanitary Issues Critical
– Winter Vegetables & Some Fruit
Products: SPS Important
 Opportunity for Input on Agreements
as ‘Fast Track’ is Implemented

Issues for Texas
Are More Trade Agreements a Desirable
Outcome?
 Without CAFTA & FTAA, U.S. Market
Access Limited
 Even with Agreements, No Guarantee of
Strong Export Growth
 Political & Economic Stability Disrupt
Trade
 With or Without Agreements, More Trade
Disputes Certain

Center for North American Studies
C
NAS
“Informed Decisions for Global
Change”
Parr Rosson
Ph: 979-845-3070
E-mail: prosson@tamu.edu