International Trade Issues International Trade Issues & Texas Agriculture& Texas Agriculture

Parr RossonProfessor & DirectorCenter for North American StudiesDepartment of Agricultural EconomicsTexas A&M University

Trade Issues & Texas Agriculture

WTO Negotiations

Complete NAFTA Implementation- 2008

Trade Agreements

Cuba Export Opportunities

Trade Disruptions

World Population

US Census Bureau

1990 2000 2001 2006 F2010 F2015 F20200

2

4

6

8

0

2

4

6

8

NA WE I. ASIA EE/FSU D. ASIA

ME AFR LA TOTAL

Billions

6.5

7.6

Ind. + 8%, Dev. + 31%

World Economic Output

Global Insight, Inc., World Economic Outlook, 2002.

1990 2000 2001 F2005 F2010 F2015 F2020$0

$10

$20

$30

$40

$50

$60

$70

NA WE I. ASIA EE/FSU

D. ASIA ME AFR CSA

GDP, Trillion 1997 Dollars

Ind. + 64%, Developing + 140%Ind. + 64%, Developing + 140%

U.S. Tariffs, 1789-2004

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

70Tariff 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, 2002

Source: WTO & ERS/USDA

115

85

5540

30 2510

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

Percent

Region Average

World Average

62%

U.S. Agricultural Trade, 1970-2006 F

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

1970 1975 1980 1985 1990 1995 2000 2006F$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

Exports Imports

Trade Surplus Shrinks

Billion Dollars

$64.5

$61.5

Since 2000

Exports + 30%

Imports + 50%

World Trade OrganizationWorld Trade Organization

Doha Development Agenda (2001-06)?

Agreement on Reductions by April 30, 2006 Did Not Happen

Draft Schedules Due July 31, 2006?

Conclude Negotiations December 31, 2006??

Trade Promotion Authority Expires July 2007

Top 10 U.S. Ag Export Markets, 2005

USDA On-line data base

$10.6

$9.4

$7.9

$6.8

$5.2

$2.3

$2.2

$1.9

$1.1

$1.0

Canada

Mexico

Japan

EU-25

China

Taiwan

Korea

CAFTA-DR

Turkey

Indonesia

Billion Dollars

Australia ‘05Australia ‘05

Bahrain ‘05Bahrain ‘05CAFTA-DR ‘05CAFTA-DR ‘05

Chile ‘04Chile ‘04

FTAA ?FTAA ?

Morocco ‘04Morocco ‘04

Southern African Southern African Customs Union ‘06Customs Union ‘06

Singapore ‘03Singapore ‘03

Jordan ‘01Jordan ‘01

U.S. Trade AgreementsU.S. Trade Agreements

NAFTA ‘94NAFTA ‘94 Israel ‘85Israel ‘85

CUSTA, ‘89CUSTA, ‘89

Andean FTA Andean FTA ‘06‘06

Panama ‘06Panama ‘06

Thailand ‘06Thailand ‘06

MEFTA MEFTA ‘06‘06

S. KoreaS. Korea

Real Growth in U.S. Exports to China and Rest of World, 1990-2005

USDOC, Bureau of the Census. Index reflects change in exports based on year 2000 US dollars.

1990 1995 2000 20050

100

200

300

400

500

600

China Rest of World

1990=100

2001, China Joins WTO

Foreign Holdings of U.S. Treasury Securities

Bureau of Economic Analysis, Survey of Current Business, July 2005.

$393

$550

$694

$169$223

$281

$141 $132$173

$131 $155

$239

2002 2003 2004$0

$100

$200

$300

$400

$500

$600

$700

$800

Japan China/Hong Kong Europe Other

Billion Dollars

Real Growth in U.S. Ag Exports to China and ROW, 1990-2005

Index base year 1990=100, reflects changes in exports in year 2000 U.S. Dollars.

1990 1995 2000 20050

100

200

300

400

500 China

Rest of World

2001, China Joins WTO

Real Growth in U.S. Ag Exports to NAFTA and ROW, 1990-2005

1990 1995 2000 20050

50

100

150

200

250

NAFTA Rest of World

Index base year 1990=100, reflects changes in exports in year 2000 U.S. Dollars. ROW excludes NAFTA and China.

NAFTA Implemented, 1994

Asian Financial

Crisis

Million Dollars

Top 5 Ag Export States, 2004

USDA, Economic Research Service. Based on shares of national production and exports.

Texas$3363

Iowa$3676

Illinois$3654

California$9197

Nebraska$3015

Texas Ag Exports, 1990-2004

USDA, Economic Research Service. Based on shares of national production and exports.

$ 2, 4

8 2

$ 2, 5

5 4

$ 2, 3

7 4 $ 2, 8

5 0 $ 3, 2

6 7

$ 3, 3

6 7

$ 3, 3

6 4

$ 2, 9

8 2

$ 3, 0

8 3

$ 2, 5

0 0

$ 3, 0

6 3

$ 2, 8

8 3

$ 2, 8

5 1

$ 3, 4

1 9

$ 3, 3

6 3

1990 1995 2000 2004$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000 Million Dollars

Composition of Texas Ag Exports, 2004

USDA, Economic Research Service. Based on national shares of production and exports.

$1,108

$706

$694

$271

$138

$136

$68

$46

$40

$156

Cotton

Feed Grains

Animals/Products

Wheat/Products

Horticulture

Poultry

Rice

Dairy

Peanuts

Other

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400

Million Dollars

Texas Ag Export Impacts

Business Activity ($ M) $6,558

Income ($ M) $2,724

Jobs (#) 88,875

Ag Exports

$3,363 million

Economic Impacts of Texas Ag Exports, 2004

IMPLAN and Center for North American Studies.

Congressional District

Ag ExportsBusiness Activity

Income Employment

Jobs

CD 19 895.5 1689.1 400.4 20343.0

CD 13 557.7 1013.2 384.3 12810.0

CD 11 238.5 438.4 156.7 7508.0

CD 15 212.4 324.0 139.6 6049.0

CD 27 145.1 246.1 115.1 3255.0

CD 14 140.1 222.4 94.4 3977.0

CD 23 121.2 213.3 88.7 2735.0

CD 4 128.3 212.5 69.5 5672.0

CD 1 119.6 195.4 64.2 2400.0

CD 17 103.2 180.1 57.7 3243.0

- - - - - - - - - - - Million Dollars - - - - - - - - - - -

Observations

Disparity in Population & Income Growth

Disparity in Use of Trade Barriers

Disparity in Agricultural Trade Growth

China Emerging as Major Market & Economic Force

ObservationsObservationsQuestions About Role & Future Importance of TradeWTO Agreement Important

Open MarketsEliminate Export Subsidy DistortionsMinimize Litigation Over Farm PolicyFruit/Vegetable Issues

Ag Exports Important to Texas Economic Growth, but Concentrated in Certain Regions

Conclusions & ImplicationsConclusions & Implications

U.S. Market Is Open, Rest of World Is Not

U.S. Export Growth Lags Import Growth

If Trade Growth is Important, Disparities Must Be AddressedProgress in WTO Important to U.S. & Texas for at Least 2 Reasons:

MarketsFarm Policy

Conclusions & ImplicationsConclusions & Implications

Absent WTO Progress, Expect More Litigation in WTO Aimed at Farm U.S. Policy

Trade Agreements Likely Important Way to Address Market Access

Trade is Important Growth Component of Texas Economy

Thank You!Thank You!

Parr Rosson

Department of Agricultural Economics

Texas A&M University

College Station, TX 77843-2124

Telephone: 979-845-3070