R ELATIONS BETWEEN AGRICULTURE, TRADE AND ENVIRONMENT IN CENTRAL AMERICA

1. RELATIONS BETWEEN AGRICULTURE, TRADE AND ENVIRONMENT IN CENTRAL AMERICA Carlos Murillo, CINPE

2. The study is focused in four main aspects • Features and trends of Central American agricultural sector. • Environmental assessment matrix. • Rights and obligations of Central America at the WTO. • Recommendations.

3. Characteristics of the Region • Small countries with tropical ecosystems • Inequitable distribution of income and capital assets • Agriculture and related agro-industries account for 30 percent of GNP • Agricultural exports represent 60 percent of total exports, although tourism is growing as an important source of foreign exchange. • In the primary sector, small farmers count as the great majority of enterprises.

4. The Economic Model • Structural adjustment programs provided the guidance during the last two decades. • Elimination of price controls and trade liberalization were among the dominant guidelines • Central America is lead towards regional and international trade liberalization, and several trade agreements have been signed • Agricultural production for exports provide a substantial part of rural employment, especially for the less educated population

5. Agriculture and Environment • Agriculture depends substantially from natural weather conditions; land under irrigation is less than 10% of total cultivated land • Small land holdings are located primarily in fragile hillsides • There is a notorious trend towards intensification in agricultural production and heavier dependence on agrochemicals • There are valuable successful experiences of sound ecological practices and sustainable agricultural enterprises. • The room for innovation and sound environmental management is quite high and promising.

6. Fuente: Elaboración propia basados en datos de FAO.

9. Environmental Impact Assessment • Matrixes • Expert consultations • Bibliographic revision • Case studies: banana, coffee, sugar cane, poultry, pork, watermelon, corn, and flowers and ornamental plants. • Clear

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14. Agriculture, Trade and Environment • Agricultural production for exports is quite intensive in use of agrochemicals, yet the producers are complying with international requirements. • Consumer demands in foreign markets are providing increased pressure on environmental quality standards and the export sector is responding properly. • Agricultural exports have limited aggregated value, and specific recognition of friendly environmental practices as an attribute. • Escalated tariffs of developed nations are among the factors that limit exports of aggregated value products

15. Centroamérica, aranceles consolidados para productos agrícolas tras su adhesión al GATT y aranceles aplicados. País Arancel Promedio Arancel Promedio a Consolidado Aplicado Costa Rica 56.29% (1995) – 42.54% 13.90% (2000) (2004) El Salvador 53.05% (1995 ) – 40.79% 12.10% (1997) (2004) Guatemala 57.73% (1995) – 48.75% 10.26% (1999) (2004) Honduras 35% (1995) – 35% (2004) 14.05% (1997) Nicaragua 60% (1995) – 40% (2004) 10.50% (1998) Fuente: Sistema Arancelario Centroamericano

16. Centroamérica, picos arancelarios a País Picos arancelarios (%) 274 Carne y despojos comestibles de ave y sus Costa Rica preparaciones 111 Productos lácteos 182 Carne y despojos comestibles de ave 115 Aceites 103 Carne bovina, congelada y ma íz amarillo El Salvador 97 Tabaco 92 Azúcar 286 Carne y despojos comestibles de ave, 268 Aceite de maíz, 258 Aceites de algodón y de girasol, 257 Aceite de palma, 178 Azúcar de caña o de remolacha, 154 Manzanas Guatemala y peras, 150 Uvas, Harinas de trigo, 125 Trigo duro, 123 Frijoles, 118 Morcajo y tranquillón, 115 Productos lácteos, 102 Habas, 100 Arroz, sorgo y tabaco Honduras No tiene, consolidó todo a 35% 220 Carne congelada de partes de aves Nicaragua 85 Productos lácteos Fuente: Centro de Comercio Internaci onal ( www.intracen.org ).

17. Green Box support Measures • Allowed support measures have been used in a very limited amount. • There has been limited imagination to provide allowed measures of support. • Limited availability of fiscal resources has been used as an argument for not providing imaginative support to agricultural production • The battle ahead is not only at WTO, but also with Ministries of Finance. • There is a strong need to review agricultural policies and to put aside tariff policy as the core policy issue.

18. Renewing the agricultural Development Model • More intensive vertical integration • Adding Value and Differentiation of Agricultural products • Positive environmental enterprise management. • Developing agricultural clusters with a geographical perspective • Attracting private investment from urban areas and foreign countries

19. Prospects • Negotiations at WTO to obtain preferential treaty for clean and value added agricultural products in OECD countries • Obtain more resources of international cooperation earmarked for sustainable agriculture • Diffusion of successful experiences in sustainable agriculture • Embassies and policy makers more informed and committed with agriculture and its role in development

20. Thank You