1 / 24

US-Chile Free Trade Agreement What is there for Agriculture?

US-Chile Free Trade Agreement What is there for Agriculture?. Jaime Malaga Texas Tech University Flynn Adcock Texas A&M University Center for North American Studies 2004 AAEA Meetings, Denver, Colorado. Overview. US-Chile Trade Main FTA Topics Agricultural Sector Impacts Implications.

Antony
Download Presentation

US-Chile Free Trade Agreement What is there for Agriculture?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. US-Chile Free Trade AgreementWhat is there for Agriculture? Jaime Malaga Texas Tech University Flynn Adcock Texas A&M University Center for North American Studies 2004 AAEA Meetings, Denver, Colorado

  2. Overview • US-Chile Trade • Main FTA Topics • Agricultural Sector Impacts • Implications

  3. Chile • 5th Economy in Latin America • 15.5 million people • Fastest growing and strongest LA economy • 25 years of stable and market oriented policies • Small size: 1.5% of US GDP, 15% of Mexico’s GDP, 10% of Brazil’s • Relatively high per capita income; ($10,000) • Overall small trade partner (37th US export market) • Large mining country and excellent agriculture

  4. Chile: Free Trade Oriented • Overall tariff level: 6% • Chile’s Free Trade Agreements under implementation: Mercosur 1996 (Associate member) Canada: 1997 Mexico: 1998 C. America: 2001 European Union: 2003

  5. Chile: Import Growth by Country • Import growth by country 2002/2000 • From the US -26% • From Mercosur: +12% • From the EU: + 5%

  6. US Agricultural Trade with Chile, 2003

  7. US Corn, Wheat, and Soybeans Exports to Chile (1999 – 2003) Corn Wheat Soybeans

  8. US-Chile FTA Background • US- Chile: 12 years talking, 2 years negotiation • 2003 Signature • January 2004 Implementation • Both economies quite open already so expected impacts not large • Schedules: • Immediate • 4 years • 8 years • 10 years • 12 years

  9. NTB Eliminated • Recognition of US food standards • Recognition of US meat inspection system • Elimination of “price bands” for wheat and other US ag. imports

  10. Impacts ?

  11. Overall Impact(USITC Year 2016) • US Exports to Chile: 18% to 52% higher • US Imports from Chile: 6% to 14% higher • Effect on US total Exports and Imports Very small (0.09% and 0.03%) • Effect on Ag Imports relatively higher.

  12. High High Exports Imports Low Low Figure ES-1Range of estimated impacts of tariff reductions on the United States from the U.S.-Chile FTA, selected sectors, 2016

  13. Wheat and Flour • US important supplier until 1997 • Market share lost: Canada 70%, and Argentina (no tariff) • FTA: negotiated elimination of “price band” and replacement with 31% initial tariff to be eliminated in 12 years • The US may recover market share form Argentina and Canada up to $ 75 million by year 12th • Difficult to recover flour market.

  14. Soybeans • US exported soybeans, soy oil and soy meal until early 90’s to Chile • Markets lost to Argentina, Brazil, Paraguay, and Bolivia. (Mercosur partners, no tariff) • FTA with US eliminates immediately 6% tariff. So competitiveness improved • No impact on oil and meal expected • US Soybeans may recover some share but not more than $ 10 million/year

  15. Beef • Beef consumption in Chile growing fast. World 9th Largest Beef importer • Main problem: standards and inspections not recognized by Chile • Argentina and Brazil major providers • FTA eliminates tariff in 4 years on US beef and allows recognition for US inspection/standards • US exports will depend on acceptation of grain-fed vs grass-fed beef quality.

  16. Ag. Imports Impact • Fresh Fruits/Vegetables • Most tariffs immediately eliminated • Import expansion up to $ 200 million additional • Processed Food (fruit) • Protected by the US: 12 year schedule. US tariffs 10-30% • Impacts can be important by year 12th, Chile has low costs for canned/preserved fruit production. • Up to $ 200 million possible.

  17. Ag. Imports Impact -2 • Avocados • Growing consumption in the US • Some overlapping with US production • US Tariff: +- 11% ad-valorem • US protection: 12 year schedule with TRQ and Safeguard (trigger prices)

  18. US Ag.Exports Growth to the World and to Chile (% change, Jan-May `03/`04)

  19. US-Chile FTA: Model for other US-LA FTA?

  20. Conclusion Implications • Small overall impact expected • Major impact in US Exports: Non-agricultural • Major impact in US Imports: Agriculture, but not dramatic • FTA will level playground with other Chilean suppliers • Ag import impacts avocados, processed fruits • Ag export impacts: wheat, soybeans, beef, high value foods • Model for other FTA with LA.

More Related