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AAEA Annual Meetings Denver, CO August 1-4, 2004. DR-CAFTA & Australia Trade Agreement: Issues & Implications for U.S. Agriculture . C. NAS. Parr Rosson Professor & Director Center for North American Studies Texas A&M University. Why Regional Agreements?. 2d Best Solution After MTN

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aaea annual meetings denver co august 1 4 2004

AAEA Annual MeetingsDenver, COAugust 1-4, 2004

DR-CAFTA & Australia Trade Agreement:Issues & Implications for U.S. Agriculture

C

NAS

Parr Rosson

Professor & Director

Center for North American Studies

Texas A&M University

why regional agreements
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
strategic considerations
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
slide4

CUSTA, ‘89

Jordan ‘03

Bahrain ‘04

DR-CAFTA ‘04

NAFTA ‘94

Israel ‘85

Morocco ‘04

Thailand ‘05

Panama ‘05

Andean FTA 05

Singapore ‘03

Chile ‘04

FTAA ‘06

Australia ‘04

Southern African Customs Union ‘05

U.S. Trade Agreements-3d Largest Market

slide5

U.S. Average Tariff, 1789-2002

Percent

70

70

Tariff of Abominations, 1828

Smoot-Hawley Tariff, 1930

60

60

Morrill Act, 1861

50

50

Generalized System of Preferences, 1968

40

40

30

30

WTO, 1995

20

20

Fordney-McCumber Tariff, 1922

10

10

GATT, 1947

0

0

1789

1789

1816

1820

1840

1860

1880

1900

1920

1940

1960

1980

2000

Statistical Abstract of the United States

slide6

World Average Agricultural Tariffs, 2000

Percent

140

Bound Average

115

World Average

120

85

100

80

62%

55

60

40

30

25

40

12

20

0

South Asia

United States

South America

North America

European Union

Central America

Caribbean Islands

slide8

Mexico

Houston, 1,300 Miles NW

Dominican Republic, 800 Miles NE

Separate Agreement with United States

North

dr cafta demographics
DR-CAFTA Demographics

Total/Avg.

44.8

$4,633

45.3

79.2

32.2

dr cafta
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)
slide11

U.S. Ag Trade with DR-CAFTA, 2003

Million Dollars

$865

$1000

Exports

Imports

Balance

$763

$800

$442

$600

$349

$280

$242

$238

$221

$400

$200

$162

$133

$114

$105

$95

$200

$0

-$19

-$21

-$200

-$400

-$414

-$600

-$623

-$800

Honduras

Nicaragua

Costa Rica

Guatemala

El Salvador

Dominican Rep.

Source: Foreign Trade Statistics, U.S. Census Bureau

slide12

U.S. Agricultural Exports to

Central America

Total, 1990: $483 million

Total, 2003: $1,339 million

Grains & Feeds

Grains & Feeds

$218

$582

Other

$47

Oilseeds

Other

$260

$129

Beverages

Oilseeds

Cotton

$37

$90

$47

Animals

Animals

Veg/Fruit

$204

Veg/Fruit

$47

$44

$117

Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

slide13

U.S. Agricultural Imports from

Central America

Total, 1990: $1,566 million

Total, 2003: $2,654 million

Bananas

Fruit/Veg

$453

$527

Fruit/Veg.

Bananas

$133

$674

Fish

$211

Fish

Other

$478

$264

Other

$328

Sugar

Sugar

Coffee

Coffee

$133

$188

$372

$459

Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

melon tariff phase out
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
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
slide16

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

Guatemala

Honduras

Nicaragua

Dom. Rep.

* Denotes Tariff-Rate Quota

slide17

CAFTA Phase-Out Period

for Yellow & White Onions

Years

18

15

15

15

15

16

14

12

12

10

10

8

6

4

2

0

Costa Rica

El Salvador

Guatemala

Honduras

Nicaragua

Dom. Rep.

slide18

Monthly U.S. Onion Shipments and Imports

Million Pounds

$/CWT

500

50

Other U.S.

Texas

Mexico

CAFTA

Other Imports

US Price

400

40

300

30

200

20

100

10

0

0

Apr

Apr

Apr

Jan 01

Jan 02

Jan 03

Jan 04

Source: Agricultural Marketing Service, USDA

slide19

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

0

Jan 01

Jan 02

Jan 03

Jan 04

May 01

May 02

May 03

Source: Agricultural Marketing Service, USDA

slide20

Monthly U.S. Cantaloupe Shipments and Imports

Million Pounds

$/CWT

400

30

Texas

Other U.S.

CAFTA

Mexico

US Price

25

300

20

200

15

10

100

5

0

0

Jan 01

Jan 02

Jan 03

Jan 04

May 01

May 02

May 03

Source: Agricultural Marketing Service, USDA

slide21

Monthly U.S. Honeydew Shipments and Imports

Million Pounds

$ per 2/3 Carton of 6s

100

20

Texas

Other US

CAFTA

Mexico

US Price

80

15

60

10

40

5

20

0

0

May

May

May

Jan 01

Jan 02

Jan 04

Source: Agricultural Marketing Service, USDA

australia trade agreement1
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
slide24

U.S.-Australia Agricultural Trade, 1990-2003

Million U.S. Dollars

$800

$612

$409

$353

$339

$338

$332

$329

$322

$319

$317

$400

$290

$283

$273

$226

$0

-$400

-$511

-$533

-$578

-$603

-$800

-$742

-$808

-$834

-$850

-$855

-$898

-$948

-$956

-$958

-$987

-$1,074

-$1,200

-$1,107

-$1,137

-$1,174

-$1,180

-$1,276

-$1,277

-$1,467

-$1,600

-$1,508

-$1,556

-$1,592

U.S. Exports

U.S. Imports

Balance

-$1,757

-$2,000

-$1,894

-$2,120

-$2,400

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

slide25

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

$627

$111

$95

$44

Hort

Bev

Other

18.1%

Sugar

29.5%

15.5%

Other

Grains

2.1%

Hort

2.8%

7.2%

2.8%

Grains

2.2%

Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

conclusions
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
concerns issues
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
concerns issues1
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?
center for north american studies

Center for North American Studies

C

NAS

Parr Rosson

Ph: 979-845-3070

E-mail: prosson@tamu.edu

“Informed Decisions for Global Change”