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

Texas Vegetable Assn. Mid-Year Meeting
McAllen, Texas
June 17, 2004
Central America Free Trade:
What’s at Stake For Texas Agriculture?
Parr Rosson, Professor & Director
Center for North American Studies
Department of Agricultural Economics
Texas A&M University
C
NAS
What’s At Stake?
 Access
to Dominican Republic &
Central American Markets
 Sources of Raw Materials
 Gains/Losses to Trade
 Greater Efficiency & Economies of
Scale
CUSTA, ‘89
NAFTA ‘94
15 Trade Agreements Completed or Pending
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
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, 2000
Percent
100
South America
Central America
Caribbean Islands
North America
86
80
52
60
86
52
40
39
40
10
20
12
0
Fruit Fresh
Source: ERS/USDA
Fruit Preparations
Bound Tariffs for Selected Products, 2000
Percent
100
South America
Central America
Caribbean Islands
North America
86
80
54
60
86
51
41
38
40
11
20
12
0
Vegetables
Source: ERS/USDA
Vegetable Preparations
DR-Central American
Free Trade Agreement
Mexico
Houston,
1,300 Miles
NW
Dominican
Republic,
800 Miles
NE
Separate
Agreement with
United States
North
CAFTA

WHO?
–
–
–
–
–
–



Costa Rica
Dominican Republic
El Salvador
Guatemala
Honduras
Nicaragua
What? Free Trade Area Between Each
Country & the United States
When? Early 2005, if Approved
How? Trade Promotion Authority
CAFTA (cont.)
About ½ of Markets Open to U.S.
Agriculture When Implemented
 Opportunities: HQ Beef, Cotton,
Wheat, Soybeans
 Rest of Market Access Over 15-20
Years: Pork, Beef, Poultry, Rice,
Corn, Dairy

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
U.S. Total Trade with CAFTA, 2003
Billion Dollars
$5.0
$4.0
Exports
Imports
Balance
$3.4$3.4
$2.9
$3.0
$2.0
$1.8
$4.5
$4.2
$3.3
$2.8
$2.3
$2.0
$1.0
$0.0
-$1.0
$0.8
$0.5
$0.1
-$0.2
-$0.7
Source: Foreign Trade Statistics, U.S. Census Bureu
-$0.5
-$0.3
-$0.2
U.S.-Central American Agricultural Trade, 1990-2003
Billion Dollars
Imports
$2.5
$2.0
$1.3
$1.4
$1.5
Exports
Balance $2.2
$2.1
$2.1
$2.1
$2.0
$2.0
$1.9
$1.9
$1.8
$1.6 $1.6
$1.3
$1.5
$1.0
$0.5 $0.6 $0.6
$0.7
$0.8
$0.9 $1.0 $1.0
$1.1 $1.1
$1.3
$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
Source: Foreign Agricultural Trade of The United States , Calender Year, USDA/ERS
2003
U.S. Ag Trade with CAFTA, 2003
Million Dollars
$1000
$865
Exports
$763
Imports
Balance
$800
$600
$400
$442
$349
$242
$238
$133
$105
$221
$200
$95$114
$200
$0
$280
$162
-$19
-$21
-$200
-$400
-$600
-$414
-$623
-$800
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Source: Foreign Trade Statistics, U.S. Census Bureu
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
U.S. Onion and Melon Exports to
CAFTA
Million Dollars
Onions
$5.0
Melons
$3.9
$4.0
$2.6
$3.0
$2.0
$1.9
$1.5
$2.0
$1.3
$1.0
$1.0
$0.6
$0.6
$0.4
$0.2
$0.0
$0.0
$0.1
$0.0
$0.0
$0.1
$0.0
$0.0
$0.0
1994
1995
1996
1997
1998
1999
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
2000
2001
2002
2003
$0.1
U.S. Onion and Melon Imports from
CAFTA
Million Dollars
$200.0
Onions
Melons
$161.1
$143.0
$150.0
$126.2
$102.5
$100.0
$142.1
$74.4
$79.0
$85.7
$106.6
$93.9
$50.0
$1.2
$0.8
$0.8
$0.8
$0.9
$1.1
$0.8
$1.2
$0.8
$1.3
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
$0.0
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
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
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
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. Cantaloupe Shipments and Imports
400
Million Pounds
Texas
Other U.S.
$/CWT
CAFTA
Mexico
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
$ per 2/3 Carton of 6s
Other US
CAFTA
Mexico
20
Price
80
15
60
10
40
5
20
0
0
n
Ja
04
02
ay
M
n
01
ay
M
Ja
n
ay
M
Ja
Source: Agricultural Marketing Service, USDA
Monthly U.S. Watermelon Shipments and Imports
800
Million Pounds
Texas
Cents/Pound, Various Red
Other U.S.
CAFTA
Mexico
0.5
Prices
0.4
600
0.3
400
0.2
200
0.1
0
0
n
Ja
04
03
03
ay
M
n
Ja
02
02
ay
M
n
Ja
01
01
ay
M
n
Ja
Source: Agricultural Marketing Service, USDA
Monthly U.S. Onion Shipments and Imports
500
Million Pounds
Other U.S.
$/CWT
Texas
Mexico
CAFTA
Other Imports
50
Price
400
40
300
30
200
20
100
10
0
Source: Agricultural Marketing Service, USDA
0





Shipping Trends
CAFTA Poses
Biggest Threat to
Texas Cantaloupe &
Honeydew
Other US Bigger
Threat in Some
Cantaloupe
Years
Mexico Beneficiary
of Higher Prices for
Onions &
Honeydew
Cantaloupe
Texas Benefits from
Higher Prices for
Cantaloupe,
Onions
Watermelon &
Onions
0.0
Declining Shipments
from Texas
Texas Shipments
97.3
80.8
56.0
52.3
35.1
34.6
2001
2002
2003
-42.5%
-33.8%
423.2
343.3
279.3
100.0
200.0
300.0
Million Pounds
400.0
-34%
500.0
Summary

Negotiations Completed
–
–


DR-CAFTA Tariff Reductions Will Open
Markets, Over Time
Dr-CAFTA Major Supplier of Honeydew and
Cantaloupe to U.S. Market
–

DR-CAFTA May Go To Congress Soon
Labor & Environmental Interests Important to the
Debate
Texas Season Overlaps with Rest of United
States & DR-CAFTA
Mexico & Other US Major Competition in
Watermelon & Onions
Issues for Texas





Are More Trade Agreements a Desirable Outcome?
Without DR-CAFTA, U.S. Market Access Limited
– Even with DR-CAFTA, No Guarantee of Market
Growth, Some Countries Need Economic
Development & Income Growth
Investment in CA May Spur Production &
Development of Infrastructure
SPS Problems May Arise, More Trade Disputes
Likely
Recent Declines in Shipments of Texas Cantaloupe,
Honeydew & Onions Troublesome
Center for North American Studies
C
NAS
“Informed Decisions for Global
Change”
Parr Rosson
Ph: 979-845-3070
E-mail: prosson@tamu.edu