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Texas Agricultural Forum Waco, Texas January 21, 2004

Texas Agricultural Forum Waco, Texas January 21, 2004. New Trade Negotiations: What’s at Stake For Texas Agriculture? Parr Rosson Center for North American Studies Department of Agricultural Economics Texas A&M University. C. NAS. What’s at Stake?. Market Access

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Texas Agricultural Forum Waco, Texas January 21, 2004

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  1. Texas Agricultural ForumWaco, TexasJanuary 21, 2004 New Trade Negotiations:What’s at Stake For Texas Agriculture? Parr Rosson Center for North American Studies Department of Agricultural Economics Texas A&M University C NAS

  2. What’s at Stake? • Market Access • Secure Sources of Raw Materials & Inputs • Gains & Losses to Trade • Adjustment for Some Sectors

  3. U.S. Trade Negotiations • GATT 1947-94 • US/Israel 1985 • Uruguay Round 1986-93 (GATT) • Canada 1989 • NAFTA 1994 (Year 10) • Doha Round 2000-05? (WTO) • 3 Regionals Completed in 2002/03 • 6 Regionals Pending

  4. CUSTA, ‘89 Jordan ‘03 Bahrain CAFTA ‘05 NAFTA ‘94 Israel ‘85 Morocco ‘06 Singapore ‘03 Chile ‘04 FTAA ‘06 Australia ‘05 Southern African Customs Union ‘06 U.S. Trade Agreements

  5. U.S. Agricultural Trade, 1970-2003 E Billion Dollars $70 Imports $60 Exports $50 Exports Trade Surplus $40 $30 $20 Imports $10 $0 1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000 2003 E

  6. US Agricultural Trade with NAFTA $16 $16 $16 $15 $14 $14 $13 $13 $13 $12 $12 $12 $12 $11 $10 $9 $9 $9 $8 $8 $7 $6 $2 $2 $2 $1 $1 $0 $0 $0 $0 -$0 -$0 Billion US Dollars US Exports US Imports Trade Balance $20 NAFTA Became Effective $15 $10 $5 $0 -$5 1990-92 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

  7. World Trade Organization“Doha Development Agenda” • Attempt to Restart is Underway • ‘Common Sense’ Letter, 1/12/04 • Export Subsidies, Trade Distorting Policies & Cotton/Cotton Textiles • Retaining Protection of the Peace Clause Important for U.S. Agriculture & Open Markets

  8. Market Access

  9. Tariff of Abominations, 1828 Smoot-Hawley Tariff, 1930 Morrill Act, 1861 Generalized System of Preferences, 1968 WTO, 1995 Fordney-McCumber Tariff, 1922 GATT, 1947

  10. 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

  11. Bound Tariffs for Selected Products Percent 100 86 86 86 86 86 80 55 54 50 50 60 46 42 40 39 39 37 40 25 25 23 19 18 20 0 Total Grains Grain Products Feed Oilseeds South America Central America Caribbean Islands North America Source: ERS/USDA

  12. Bound Tariffs for Selected Products Percent 91 90 90 100 88 87 86 85 80 80 68 68 55 60 49 48 43 43 43 41 41 34 40 21 20 0 Live Animals Meat Fresh Meat Frozen Meat Prepared Dairy South America Central America Caribbean Islands North America Source: ERS/USDA

  13. New Agreements

  14. Chile • Effective January 1, 2004 • Tariffs Eliminated Immediately, or Over 4, 8, 10 or 12 Years • Chile’s Price Band System on Wheat, Vegetable Oils, & Sugar Eliminated • U.S. Receives Preferential Access Compared to Canada & European Union • U.S. Export Impacts Small (18-52%) • U.S. Import Impacts Small (6-14%)

  15. U.S.-Chile Agricultural Trade, 1990 - 2002 Billion U.S. Dollars $1,500 $1,154 $1,027 $1,023 $1,000 $910 $784 $751 $745 $547 $543 $495 $481 $457 $445 $500 $169 $152 $135 $126 $126 $116 $111 $109 $103 $98 $94 $72 $63 $0 -$348 -$374 -$378 -$500 -$401 -$418 -$441 -$619 -$625 -$648 -$758 -$1,000 -$910 -$924 -$1,043 U.S. Exports U.S. Imports Balance -$1,500 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

  16. U.S. Agricultural Exports to Chile, 2002 Total: $111.1 Million Food Preps Wheat 9.0% 16.3% Animal Feed 6.6% Rice $10.0 $18.1 6.1% $7.3 $6.8 Cotton $4.7 4.2% $19.9 $3.6 Corn Gluten $3.5 Saps/Thickeners 17.9% $3.3 3.2% Seeds 3.2% $33.9 Corn 3.0% Other 30.5%

  17. U.S. Agricultural Imports from Chile, 2002 Total: $1,154 Million Grape Wines 11.9% Stone Fruit 9.4% Corn $136.9 $108.7 7.1% $82.2 $81.5 $464.1 Avocados $55.5 Grapes 7.1% 40.2% $52.8 $132.6 Fruit Juices $39.3 4.8% Apples/Pears 4.6% Kiwi/Berries Other 3.4% 11.5%

  18. Central America Free Trade Agreement

  19. CAFTA • WHO so Far? El Salvador, Guatemala, Honduras, Nicaragua • Costa Rica & Dominican Republic to be Added w/in Months • About ½ of Markets Open to U.S. Agriculture When Implemented (Jan. 2005)?? • HQ Beef, Cotton, Wheat, Soybeans • Rest Over 15-20 Years: Pork, Beef, Poultry, Rice, Corn, Dairy

  20. Mexico Houston, 1,300 Miles NW Dominican Republic, 800 Miles NE North

  21. CAFTA Demographics Total/Avg. 44.8 $4,633 45.3 79.2 32.2

  22. 2002

  23. U.S. Agricultural Exports to Central America Total, 2000: $1118 million Total, 1990: $482 million Grains & Feeds Grains & Feeds $422 $217 Rice Other $56 $69 Oilseeds Other $194 $196 Vegetables Oilseeds $27 Tobacco Vegetables Animals Animals $90 $33 $89 $162 $47

  24. U.S. Rice Exports, 1993 and 2002 Thousand Metric Tons 2002 Total: 3,809 TMT 1993 Total: 2,860 TMT 897 1,000 691 800 625 620 573 600 481 419 417 407 324 315 400 266 112 99 200 88 65 0 1993 2002 N Amer. C Amer. Asia W Europe Carib. Mid East Africa S Amer. Source: Foreign Agricultural Service, USDA, www.fas.usda.gov/ustrade

  25. U.S. Agricultural Imports from Central America Total, 2000: $2977 million Total, 1990: $1699 million Fish Coffee Shellfish Bananas $211 $159 $732 Sugar Coffee $611 $133 $372 Fish $478 Bananas Other Other Shellfish $453 $1361 $742 $368 Fruits $274

  26. Free Trade Area of the Americas

  27. FTAA • Open Markets in Western Hemisphere • Average US Ag. Tariffs 12% • South America: 40% • Caribbean: 85% • Negotiations Moving Forward, But Slower than Expected: Brazil a Sticking Point • Target Date for Completion 1/05 • Target Date for Implementation 1/06

  28. U.S. Agricultural Exports to South America Total, 1990: $1062 million Total, 2000: $1706 million Grains $575 Oilseeds Grains $230 $711 Animals $197 Other $96 Cotton Oilseeds $141 Vegetables Vegetables $141 $59 Rice $122 Other Animals $62 $305 $131 Source: , Calendar Year, USDA/ERS Foreign Agricultural Trade of The United States

  29. U.S. Agricultural Imports from South America Total, 1990: $5179 million Total, 2000: $6847 million Fruits Other Coffee Shellfish $742 $3288 $851 $657 Bananas $487 Fish Sugar Prod. $1410 $279 Bananas $449 Shellfish Coffee $491 $799 Fruit Juices Fish Other $644 $788 $4487 Source: , Calendar Year, USDA/ERS Foreign Agricultural Trade of The United States

  30. Raw Materials & Inputs

  31. U.S. Oil Imports by Source 12.03 11.46 11.02 10.16 8.84 8.33 8.02 7.71 6.91 5.07 Petroleum Imports by Country of Origin, 1960-2001. USDOE, EIA, Annual & Monthly Reports NAFTA Non-OPEC (Ex. NAFTA) OPEC 14.00 Million Barrels/Day (Avg.) 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1980 1985 1990 1993 NAFTA 1995 1997 2000 2001 2002

  32. U.S. Fertilizer Imports 18.1 17.0 16.6 15.3 14.9 14.6 13.9 13.7 13.6 12.2 10.8 10.8 10.4 USDA, FAS Canada W. Europe ROW 20.0 Million Metric Tons 15.0 10.0 5.0 0.0 1990 1993 1995 2000 2002

  33. U.S. Fertilizer Imports from ROW Annual Average 1990-92 226 1,000 Metric Tons 250 200 193 200 150 117 117 111 100 50 0 Chile Israel Mexico Bulgaria Russia/Belarus Trinidad/Tobago

  34. U.S. Fertilizer Imports from Row, 2002 1600 1,000 Metric Tons 1291 1400 1,000 Metric Tons 1200 1000 800 438 600 394 289 400 216 178 160 88 72 31 200 0 Qatar Egypt Kuwait Bahrain Morocco Lithuania Venezuela Saudi Arabia Russia/Belarus Trinidad/Tobago

  35. Gains to Trade

  36. Exports, Imports, Farm Income • U.S. Agricultural Exports to W.H. Countries Up 8% After Full Phase-In to $600 million • U.S. Agricultural Imports from W.H. Countries Up 6% to $850 Million • U.S. Farm Income Up $200 Million/Year ERS, USDA, 2000.

  37. Sector Impacts • More Exports of Corn, Soybeans, Cotton • More Imports/Competition for Sugar, Peanuts, Citrus, Some Vegetables • FTAA Likely to $4.0 Billion to U.S. GDP/Year ERS, USDA, 2000.

  38. So What for Texas? • More Exports & Potential for Higher Prices • Access to Lower Cost Inputs • More Competition in Some Sectors • Sugar, Peanuts, Textiles, Maybe Cotton • Meats-But Sanitary Issues Critical • Winter Vegetables & Some Fruit Products: SPS Important • Opportunity for Input on Agreements as ‘Fast Track’ is Implemented

  39. Issues for Texas • Are More Trade Agreements a Desirable Outcome? • Without CAFTA & FTAA, U.S. Market Access Limited • Even with Agreements, No Guarantee of Strong Export Growth • Political & Economic Stability Disrupt Trade • With or Without Agreements, More Trade Disputes Certain

  40. Center for North American Studies C NAS Parr Rosson Ph: 979-845-3070 E-mail: prosson@tamu.edu “Informed Decisions for Global Change”

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