Texas Agricultural ForumTexas Agricultural ForumWaco, TexasWaco, Texas
January 21, 2004January 21, 2004
New Trade Negotiations:New Trade Negotiations:What’s at Stake For Texas Agriculture?What’s at Stake For Texas Agriculture?
Parr RossonParr Rosson
Center for North American StudiesCenter for North American Studies
Department of Agricultural EconomicsDepartment of Agricultural Economics
Texas A&M UniversityTexas A&M University CNAS
What’s at Stake?What’s at Stake?Market AccessSecure Sources of Raw Materials &
InputsGains & Losses to TradeAdjustment for Some Sectors
U.S. Trade NegotiationsU.S. Trade NegotiationsGATT 1947-94US/Israel 1985Uruguay Round 1986-93 (GATT)Canada 1989NAFTA 1994 (Year 10)Doha Round 2000-05? (WTO)3 Regionals CompletedCompleted in 2002/036 Regionals Pending
Australia ‘05
BahrainCAFTA ‘05
Chile ‘04
FTAA ‘06
Morocco ‘06
Southern African Customs Union ‘06
Singapore ‘03
Jordan ‘03
U.S. Trade AgreementsU.S. Trade Agreements
NAFTA ‘94 Israel ‘85
CUSTA, ‘89
U.S. Agricultural Trade, 1970-2003 EU.S. Agricultural Trade, 1970-2003 E
1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000 2003 E$0
$10
$20
$30
$40
$50
$60
$70Billion Dollars
Imports
Exports
Trade Surplus
Imports
Exports
US Agricultural Trade with NAFTAUS Agricultural Trade with NAFTA
$8
$9
$10$9
$12 $12
$13$13
$14
$16 $16
$6
$7$8
$9
$11$12
$12 $13$14
$15$16
$2 $2 $2
-$0
$1$0 $1
-$0
$0 $0 $0
1990-92 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
$0
$5
$10
$15
$20
-$5
Billion US Dollars
US Exports US Imports Trade Balance
NAFTA Became NAFTA Became EffectiveEffective
World Trade OrganizationWorld Trade Organization“Doha Development Agenda”“Doha Development Agenda”
Attempt to Restart is Underway‘Common Sense’ Letter, 1/12/04Export Subsidies, Trade Distorting
Policies & Cotton/Cotton TextilesRetaining Protection of the Peace Clause
Important for U.S. Agriculture & Open Markets
Market AccessMarket Access
U.S. Average Tariff, 1789-2002
Statistical Abstract of the United States
1789 1816 1820 1840 1860 1880 1900 1920 1940 1960 1980 20000
10
20
30
40
50
60
70Percent
0
10
20
30
40
50
60
70
Tariff of Abominations, 1828
Morrill Act, 1861
Smoot-Hawley Tariff, 1930
Generalized System of Preferences, 1968
Fordney-McCumber Tariff, 1922
GATT, 1947
WTO, 1995
World Average Agricultural Tariffs, 2000
115
85
55
4030
25
12
South
Asia
Carib
bean Is
lands
Centra
l Am
erica
South
Am
erica
Europea
n Union
North
Am
erica
United S
tates
0
20
40
60
80
100
120
140 Bound Average
World Average
62%
Percent
Bound Tariffs for Selected Products
3946
40 39 37
54 5550 50
42
86 86 86 86 86
25 2519
2318
Total Grains Grain Products Feed Oilseeds0
20
40
60
80
100
Percent
South America Central America Caribbean Islands North AmericaSource: ERS/USDA
Bound Tariffs for Selected Products
34
43 43 41 4348
68
86
55
68
8891 90 90
87
21
49
80
41
85
Live Animals Meat Fresh Meat Frozen Meat Prepared Dairy0
20
40
60
80
100
Percent
South America Central America Caribbean Islands North America
Source: ERS/USDA
New AgreementsNew Agreements
ChileChileEffective January 1, 2004Tariffs Eliminated Immediately, or Over
4, 8, 10 or 12 YearsChile’s Price Band System on Wheat, Chile’s Price Band System on Wheat,
Vegetable Oils, & Sugar EliminatedVegetable Oils, & Sugar EliminatedU.S. Receives Preferential Access U.S. Receives Preferential Access
Compared to Canada & European UnionCompared to Canada & European UnionU.S. Export Impacts Small (18-52%)U.S. Import Impacts Small (6-14%)
$63 $72 $94 $109 $103$169 $126 $126 $135 $152 $116 $98 $111
$481 $445 $495 $457$543 $547
$751 $745 $784$910
$1,027 $1,023$1,154
-$418 -$374 -$401 -$348-$441
-$378
-$625 -$619 -$648-$758
-$910 -$924-$1,043
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
$0
$500
$1,000
$1,500
-$500
-$1,000
-$1,500
Billion U.S. Dollars
U.S. Exports U.S. Imports Balance
U.S.-Chile Agricultural Trade, 1990 - 2002U.S.-Chile Agricultural Trade, 1990 - 2002
Immediate 4 Years 10 YearsPork *Beef, with TRQ Poultry, with TRQ
Some Fruits Some FruitsSome Vegetables Some VegetablesSome Tree Nuts Some Tree Nuts
WheatCorn 8 Years 12 YearsRice Some Fruits Some Fresh Vegetables
Other Grains Some Vegetables Dairy, with TRQWheat Flour Some Processed Foods Tobacco, with TRQ
Soybeans/Products Some Sugar/Products, with TRQ*Cotton Some Processed Foods
Some Sugar/Products
Immediate 4 Years 10 YearsPork *Beef, with TRQ Chicken Parts,
Fresh Fruits Chicken, Whole with TRQFresh Vegetables Some Dairy
Tree Nuts *Corn (2 Years) 12 YearsOther Grains Wheat
Soybeans/Products Rice*Cotton 8 Years Wheat FlourTobacco Some Dairy Vegetable Oils
Sugar/ProductsProcessed Foods
U.S. Access to Chile
Chile's Access to U.S. Market
U.S. Agricultural Exports to Chile, 2002U.S. Agricultural Exports to Chile, 2002
Corn Gluten17.9%
Wheat16.3%
Food Preps9.0%
Animal Feed6.6%
Rice6.1%
Cotton4.2%
Saps/Thickeners3.2% Seeds
3.2%
Corn3.0%
Other30.5%
$19.9
$18.1$10.0$7.3
$6.8
$4.7$3.6
$3.5$3.3
$33.9
Total: $111.1 Million
U.S. Agricultural Imports from Chile, 2002U.S. Agricultural Imports from Chile, 2002
Grapes40.2%
Grape Wines11.9%
Stone Fruit9.4%
Corn7.1%
Avocados7.1%
Fruit Juices4.8%
Apples/Pears4.6%
Kiwi/Berries3.4%
Other11.5%
$464.1
$136.9$108.7
$82.2
$81.5
$55.5$52.8
$39.3$132.6
Total: $1,154 Million
Central America Free Central America Free Trade AgreementTrade Agreement
CAFTACAFTAWHO so Far? El Salvador,
Guatemala, Honduras, NicaraguaCosta Rica & Dominican Republic to
be Added w/in MonthsAbout ½ of Markets Open to U.S.
Agriculture When Implemented (Jan. 2005)??– HQ Beef, Cotton, Wheat, SoybeansHQ Beef, Cotton, Wheat, Soybeans
Rest Over 15-20 Years: Pork, Beef, Poultry, Rice, Corn, Dairy
Dominican Republic, 800 Miles NE
North
Houston, 1,300 Miles NW
Mexico
CAFTA DemographicsCAFTA DemographicsCountry Pop.
(mil)GDP/
PersonPoverty
%Lit.%
Ag. Pop. %
Costa Rica 3.9 $8,300$8,300 20.6 96 20
El Salvador 6.5 $4,600 4848 80.2 30
Guatemala 13.913.9 $3,900 7575 70.670.6 5050Honduras 6.7 $2,500 5353 76.176.1 3434Nicaragua 5.1 $2,200 5050 67.567.5 4242Dom. Rep. 8.78.7 $6,300$6,300 25 84.7 17
Total/Total/AvgAvg.
44.844.8 $4,633$4,633 45.345.3 79.279.2 32.232.2
U.S. Agricultural Trade with Central America
$0.5 $0.6 $0.6 $0.7 $0.8 $0.9 $1.0 $1.0
$1.3$1.1 $1.1 $1.2 $1.3
-$0.8 -$0.8 -$0.9 -$0.9 -$0.8 -$0.9 -$1.0-$1.2
-$0.8 -$0.8-$1.0
-$0.7 -$0.7
$1.3 $1.4 $1.5 $1.6 $1.6$1.8
$2.0$2.2 $2.1
$1.9$2.1
$1.9 $2.0
1990 1995 2000
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
-$0.5
-$1.0
-$1.5
Billion Dollars
Exports Trade Balance
Imports
2002
U.S. Agricultural Exports to Central America
Grains & Feeds$217
Oilseeds$90 Animals
$47
Tobacco$33
Vegetables$27
Other$69
Grains & Feeds$422
Oilseeds$194
Animals$162
Vegetables$89
Other$196
Rice$56
Total, 1990: $482 million Total, 2000: $1118 million
U.S. Rice Exports, 1993 and 2002U.S. Rice Exports, 1993 and 2002
Source: Foreign Agricultural Service, USDA, www.fas.usda.gov/ustrade
407
897
112
625
65
620
481419
266
417
691
324
573
315
88 99
1993 20020
200
400
600
800
1,000
Thousand Metric Tons
N Amer. C Amer. Asia W Europe Carib. Mid East Africa S Amer.
1993 Total: 2,860 TMT 2002 Total: 3,809 TMT
Bananas$453
Coffee$372
Fish$211
Shellfish$159Sugar
$133
Other$742
Coffee$732Bananas
$611
Fish$478
Shellfish$368 Fruits
$274
Other$1361
U.S. Agricultural Imports fromCentral America
Total, 1990: $1699 million Total, 2000: $2977 million
Free Trade Area of the Free Trade Area of the AmericasAmericas
FTAAFTAAOpen 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 1/05Target Date for Implementation 1/06
U.S. Agricultural Trade with South America
$1.1 $1.2 $1.4 $1.5$1.8
$2.3$2.6 $2.7 $2.6
$1.8 $1.7
$3.9 $3.7 $3.8 $3.6$4.1 $4.2
$4.8$5.4
$4.9$5.3
$4.8
-$2.8-$2.5 -$2.4
-$2.1 -$2.3-$1.9
-$2.2-$2.7
-$2.3
-$3.5-$3.1
1990 1995 2000
$0.0
$2.0
$4.0
$6.0
-$2.0
-$4.0
Billion Dollars
Exports Imports
Trade Balance
Grains$575
Oilseeds$141
Animals$131
Rice$62
Vegetables$59
Other$96
Grains$711
Oilseeds$230
Animals$197
Cotton$141
Other$305
Vegetables$122
U.S. Agricultural Exports to South AmericaU.S. Agricultural Exports to South America
Source: Foreign Agricultural Trade of The United States , Calendar Year, USDA/ERS
Total, 1990: $1062 million Total, 2000: $1706 million
Coffee$799
Fish$788
Fruit Juices$644
Shellfish$491
Bananas$449
Other$3288
Fish$1410
Coffee$851
Fruits$742
Shellfish$657
Bananas$487
Sugar Prod.$279
Other$4487
U.S. Agricultural Imports fromU.S. Agricultural Imports fromSouth AmericaSouth America
Source: Foreign Agricultural Trade of The United States, Calendar Year, USDA/ERS
Total, 1990: $5179 million Total, 2000: $6847 million
Raw Materials & InputsRaw Materials & Inputs
U.S. Oil Imports by SourceU.S. Oil Imports by Source
Petroleum Imports by Country of Origin, 1960-2001. USDOE, EIA, Annual & Monthly Reports
6.91
5.07
8.02 7.718.33
8.84
10.16
11.4611.02
12.03
1980 1985 1990 1993 NAFTA 1995 1997 2000 2001 20020.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00NAFTA Non-OPEC (Ex. NAFTA) OPEC
Million Barrels/Day (Avg.)
U.S. Fertilizer ImportsU.S. Fertilizer Imports
USDA, FAS
10.8 10.8 10.4
12.2
13.6 13.7 13.914.6
15.3 14.9
16.6
18.117.0
1990 1993 1995 2000 20020.0
5.0
10.0
15.0
20.0 Canada W. Europe ROW
Million Metric Tons
U.S. Fertilizer Imports from ROWU.S. Fertilizer Imports from ROWAnnual Average 1990-92Annual Average 1990-92
226
200 193
117 117 111
Israel
ChileRussia/Belarus
Bulgaria
Mexico
Trinidad/Tobago
0
50
100
150
200
250 1,000 Metric Tons
U.S. Fertilizer Imports from Row, 2002U.S. Fertilizer Imports from Row, 2002
1291
438 394289
216 178 16088 72 31
Russia/Belarus
Trinidad/Tobago
Saudi Arabia
Qatar
Bahrain
Venezuela
Egypt
Lithuania
Morocco
Kuwait
0
200
400
600
800
1000
1200
1400
1600
1,000 Metric Tons
1,000 Metric Tons
Gains to TradeGains to Trade
Exports, Imports, Farm IncomeExports, Imports, Farm Income
U.S. Agricultural Exports to W.H. Countries Up 8% After Full Phase-In 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 ImpactsSector ImpactsMore Exports of Corn, Soybeans,
CottonMore 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?So What for Texas?More Exports & Potential for Higher
PricesAccess to Lower Cost InputsMore Competition in Some Sectors
– Sugar, Peanuts, Textiles, Maybe Cotton– Meats-But Sanitary Issues Critical– Winter Vegetables & Some Fruit
Products: SPS ImportantOpportunity for Input on Agreements as
‘Fast Track’ is Implemented
Issues for TexasIssues for TexasAre More Trade Agreements a Desirable
Outcome?Without CAFTA & FTAA, U.S. Market
Access LimitedEven with Agreements, No Guarantee of
Strong Export GrowthPolitical & Economic Stability Disrupt
TradeWith or Without Agreements, More Trade
Disputes Certain
Center for North American StudiesCenter for North American Studies
Parr RossonParr Rosson
Ph: 979-845-3070Ph: 979-845-3070
E-mail: [email protected]: [email protected]
“Informed Decisions for Global Change”
CNAS