aaea annual meetings denver, co august 1-4, 2004 dr-cafta & australia trade agreement: issues...
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AAEA Annual MeetingsAAEA Annual MeetingsDenver, CODenver, CO
August 1-4, 2004August 1-4, 2004
DR-CAFTA & Australia Trade Agreement:DR-CAFTA & Australia Trade Agreement:Issues & Implications for U.S. Agriculture Issues & Implications for U.S. Agriculture
CNASParr RossonParr RossonProfessor & DirectorProfessor & DirectorCenter for North American StudiesCenter for North American StudiesTexas A&M UniversityTexas 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
CNAS
Strategic ConsiderationsStrategic ConsiderationsSupport 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
CNAS
Australia ‘04Australia ‘04
Bahrain ‘04Bahrain ‘04DR-CAFTA DR-CAFTA ‘04‘04
Chile ‘04Chile ‘04FTAA ‘06
Morocco ‘04Morocco ‘04
Southern African Southern African Customs Union ‘05Customs Union ‘05
Singapore ‘03Singapore ‘03
Jordan ‘03Jordan ‘03
U.S. Trade Agreements-3d Largest MarketU.S. Trade Agreements-3d Largest Market
NAFTA ‘94NAFTA ‘94 Israel ‘85Israel ‘85
CUSTA, ‘89CUSTA, ‘89
Andean FTA Andean FTA 0505
Panama ‘05Panama ‘05
Thailand ‘05Thailand ‘05
U.S. Average Tariff, 1789-2002
Statistical Abstract of the United States
17891816 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
1789
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
DR-Central DR-Central American Free American Free
Trade AgreementTrade Agreement
CNAS
Dominican Republic, 800 Miles NE
North
Houston, 1,300 Miles NW
Mexico
Separate Agreement with
United States
DR-CAFTA DemographicsDR-CAFTA 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$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
DR-CAFTADR-CAFTAAbout ½ of Markets Open to U.S.
Agriculture When Implemented – Opportunities for HQ Beef, Cotton, Wheat, Opportunities for HQ Beef, Cotton, Wheat,
SoybeansSoybeans
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)
CNAS
U.S. Ag Trade with DR-CAFTA, 2003
Source: Foreign Trade Statistics, U.S. Census Bureau
$242 $238$349
$200$95
$442
$865
$105
$763
$221$114
$280
-$623
$133
-$414
-$21 -$19
$162
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Dominican Rep.
$0
$200
$400
$600
$800
$1000
-$200
-$400
-$600
-$800
Million Dollars
Exports Imports Balance
U.S. Agricultural Exports to Central America
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Grains & Feeds$218
Oilseeds$90
Animals$47
Veg/Fruit$44
Beverages$37
Other$47
Grains & Feeds$582
Oilseeds$260
Animals$204 Veg/Fruit
$117
Cotton$47
Other$129
Total, 1990: $483 million Total, 2003: $1,339 million
U.S. Agricultural Imports fromCentral America
Bananas$453
Fruit/Veg.$133
Fish$211
Coffee$372
Sugar$133
Other$264
Bananas$674
Fruit/Veg$527
Fish$478
Coffee$459
Sugar$188
Other$328
Total, 1990: $1,566 million Total, 2003: $2,654 million
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Melon Tariff Phase-OutMelon Tariff Phase-Out
US Tariffs Eliminated ImmediatelyMost CA Tariffs Eliminated
ImmediatelyException: Dominican Republic May
Impose 20% Safeguard Duties– 5 Years for Watermelon– 10 Years for Other Melons
CNAS
Onion Tariff Phase-OutOnion Tariff Phase-Out
US Tariffs Eliminated Immediately
CA Tariffs Eliminated Over 10 to 15 Years
All But El Salvador Have Some Type of Safeguard or Tariff-Rate Quota
CNAS
CAFTA Base Tariffsfor Yellow & White Onions
47
15 15 15 15
97
Costa Rica* El Salvador Guatemala Honduras Nicaragua Dom. Rep.0
20
40
60
80
100
120 Percent
* Denotes Tariff-Rate Quota
CAFTA Phase-Out Periodfor Yellow & White Onions
15
12
10
15 15 15
Costa Rica El Salvador Guatemala Honduras Nicaragua Dom. Rep.0
2
4
6
8
10
12
14
16
18 Years
Monthly U.S. Onion Shipments and Imports
Source: Agricultural Marketing Service, USDA
Jan 01
AprJan 02
AprJan 03
AprJan 04
0
100
200
300
400
500Million Pounds
0
10
20
30
40
50$/CWT
Other U.S. Texas Mexico CAFTA Other Imports US Price
Monthly U.S. Watermelon Shipments and Imports
Source: Agricultural Marketing Service, USDA
Jan 01
May 01
Jan 02
May 02
Jan 03
May 03
Jan 04
0
200
400
600
800Million Pounds
0
0.1
0.2
0.3
0.4
0.5Cents/Pound, Various Red
Texas Other U.S. CAFTA Mexico US Price
Monthly U.S. Cantaloupe Shipments and Imports
Source: Agricultural Marketing Service, USDA
Jan 01
May 01
Jan 02
May 02
Jan 03
May 03
Jan 04
0
100
200
300
400Million Pounds
0
5
10
15
20
25
30$/CWT
Texas Other U.S. CAFTA Mexico US Price
Monthly U.S. Honeydew Shipments and Imports
Source: Agricultural Marketing Service, USDA
Jan 01
May
Jan 02
May
May
Jan 04
0
20
40
60
80
100Million Pounds
0
5
10
15
20$ per 2/3 Carton of 6s
Texas Other US CAFTA Mexico US Price
Australia Trade Australia Trade AgreementAgreement
CNAS
Australia Trade AgreementAustralia Trade AgreementAustralia Will Eliminate All Tariffs
ImmediatelyUS Fruits/Vegetables Have Price
SafeguardsUS 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 TRQUS Sugar Grants No Additional Access CNAS
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
$226 $283 $273 $332$409
$339 $322 $353 $329 $319 $317 $290 $338
$612
-$1,174-$1,180-$1,107-$1,074
-$987-$850 -$855
-$956
-$1,137-$1,277
-$1,592
-$1,757-$1,894
-$2,120
-$948 -$898-$834
-$742
-$578-$511 -$533
-$603
-$808-$958
-$1,276
-$1,467-$1,556-$1,508
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
$0
$400
$800
-$400
-$800
-$1,200
-$1,600
-$2,000
-$2,400
Million U.S. Dollars
U.S. Exports U.S. Imports Balance
U.S.-Australia Agricultural Trade, 1990-2003
U.S. Agricultural Trade with Australia, 2003
Animals37.9%Oilseeds
21.2%
Hort18.1%
Grains7.2%
Other15.5%
$232$130
$111$44
$95
Animal Products60.6%
Bev29.5%
Hort2.8%
Grains2.2%
Sugar2.1% Other
2.8%
Total Imports: $2,120 MillionTotal Exports: $612 Million
$627
$1,174
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
ConclusionsConclusionsU.S. Market Much More Open than
Other CountriesWith 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
CNAS
Concerns & IssuesConcerns & IssuesAre 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 CNAS
Concerns & IssuesConcerns & IssuesAustralian Wheat Board Not DisciplinedConcerns 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?
CNAS
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 Informed Decisions for Global Change”Change”
CNAS