texas agricultural forum waco, texas january 21,...

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?

lMarket Access

lSecure Sources of Raw Materials & Inputs

lGains & Losses to Trade

lAdjustment for Some Sectors

U.S. Trade NegotiationsU.S. Trade NegotiationslGATT 1947-94lUS/Israel 1985lUruguay Round 1986-93 (GATT)lCanada 1989lNAFTA 1994 (Year 10)lDoha Round 2000-05? (WTO)l 3 Regionals CompletedCompleted in 2002/03l 6 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, 1970U.S. Agricultural Trade, 1970--2003 E2003 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”

l Attempt to Restart is Underway

l ‘Common Sense’ Letter, 1/12/04

l Export Subsidies, Trade Distorting Policies & Cotton/Cotton Textiles

l Retaining 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 A

sia

Carib

bean Isl

ands

Central A

meric

a

South A

meric

a

European Unio

n

North A

mer

ica

United S

tate

s0

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

ChileChilel Effective January 1, 2004

l Tariffs Eliminated Immediately, or Over 4, 8, 10 or 12 Years

ll Chile’s Price Band System on Wheat, Chile’s Price Band System on Wheat, Vegetable Oils, & Sugar EliminatedVegetable Oils, & Sugar Eliminated

ll U.S. Receives Preferential Access U.S. Receives Preferential Access Compared to Canada & European UnionCompared to Canada & European Union

l U.S. Export Impacts Small (18-52%)

l 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.U.S.--Chile Agricultural Trade, 1990 Chile Agricultural Trade, 1990 -- 20022002

Immediate 4 Years 10 YearsPork *Beef, with TRQ Poultry, with TRQ

Some Fruits Some Fruits

Some Vegetables Some Vegetables

Some Tree Nuts Some Tree Nuts

Wheat

Corn 8 Years 12 YearsRice Some Fruits Some Fresh Vegetables

Other Grains Some Vegetables Dairy, with TRQ

Wheat 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 TRQ

Fresh Vegetables Some Dairy

Tree Nuts *Corn (2 Years) 12 YearsOther Grains Wheat

Soybeans/Products Rice

*Cotton 8 Years Wheat Flour

Tobacco Some Dairy Vegetable Oils

Sugar/Products

Processed Foods

U.S. Access to Chile

Chi le ' 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

CAFTACAFTA

l WHO so Far? El Salvador, Guatemala, Honduras, Nicaragua

l Costa Rica & Dominican Republic to be Added w/in Months

l About ½ of Markets Open to U.S. Agriculture When Implemented (Jan. 2005)??

–– HQ Beef, Cotton, Wheat, SoybeansHQ Beef, Cotton, Wheat, Soybeans

l 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 Demographics

1784.725$6,300$6,3008.78.7Dom. Rep.

424267.567.55050$2,2005.1Nicaragua

343476.176.15353$2,5006.7Honduras

505070.670.67575$3,90013.913.9Guatemala

3080.24848$4,6006.5El Salvador

209620.6$8,300$8,3003.9Costa Rica

Ag. Pop. %

Lit.%

Poverty%

GDP/Person

Pop.(mil)

Country

Total/AvgTotal/Avg.

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


Free Trade Area of the Free Trade Area of the AmericasAmericas

FTAAFTAA

l Open Markets in Western Hemisphere

– Average US Ag. Tariffs 12%

– South America: 40%

– Caribbean: 85%

l Negotiations Moving Forward, But Slower than Expected: Brazil a Sticking Point

l Target Date for Completion 1/05

l Target 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


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


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

20.0Canada W. Europe ROW

Million Metric Tons

U.S. Fertilizer Imports from ROWU.S. Fertilizer Imports from ROWAnnual Average 1990Annual Average 1990--9292

226

200 193

117 117 111

Israel

Chile

Russia/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

Kuw

ait

0

200

400

600

800

1000

1200

1400

1600

1 , 0 0 0 M e t r i c T o n s

1,000 Metric Tons

Gains to TradeGains to Trade

Exports, Imports, Farm IncomeExports, Imports, Farm Income

l U.S. Agricultural Exports to W.H. Countries Up 8% After Full Phase-In to $600 million

l U.S. Agricultural Imports from W.H. Countries Up 6% to $850 Million

l U.S. Farm Income Up $200 Million/Year

ERS, USDA, 2000.

Sector ImpactsSector Impacts

l More Exports of Corn, Soybeans, Cotton

l More Imports/Competition for Sugar, Peanuts, Citrus, Some Vegetables

l FTAA Likely to $4.0 Billion to U.S. GDP/Year

ERS, USDA, 2000.

So What for Texas?So What for Texas?l More Exports & Potential for Higher

Prices

l Access to Lower Cost Inputs

l More Competition in Some Sectors

– Sugar, Peanuts, Textiles, Maybe Cotton

– Meats-But Sanitary Issues Critical

– Winter Vegetables & Some Fruit Products: SPS Important

l Opportunity for Input on Agreements as ‘Fast Track’ is Implemented

Issues for TexasIssues for Texas

l Are More Trade Agreements a Desirable Outcome?

l Without CAFTA & FTAA, U.S. Market Access Limited

l Even with Agreements, No Guarantee of Strong Export Growth

l Political & Economic Stability Disrupt Trade

l With or Without Agreements, More Trade Disputes Certain

Center for North American StudiesCenter for North American Studies

Parr RossonParr Rosson

Ph: 979Ph: 979--845845--30703070

EE--mail: mail: prossonprosson@@tamutamu..eduedu

“Informed Decisions for Global Change”

CNAS

texas agricultural forum waco, texas january 21,...

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