United States Regional and Bilateral Trade Agreements
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1 United States Regional and Bilateral Trade Agreements Agricultural Trade and Policy Reform: Where is the Action? A Workshop on the Current State of Multilateral, Bilateral and Unilateral Policy Discussions and their Implications Mechel S. Paggi & Fumiko Yamazaki * Imperial College London Wye Campus 20 November, 2006 Mechel S. Paggi, Director and Fumiko Yamazaki, Senior Research Economist Center for Agricultural Business, California State University, Fresno
2 Part 1 Overview of U.S. Regional and Bi-Lateral Trade Agreements Time Horizons and Why (Perhaps?) Process for Selecting FTA Candidates
3 CUSTA, 89 NAFTA 94 CAFTA-DR 04 Morocco 04 Jordan 03 Bahrain 04 Israel 85 Thailand 05 Panama 05 Peru FTA 05, Columbia, Bolivia, Ecuador: Andean Trade Promotion Agreement FTAA 4/98? Chile 04 Southern African Customs Union 05 Singapore 03 Australia 04 U.S. Regional and Bilateral Trade Agreements
4 Uruguay Round 4/16/94 Fast Track Lapses ( ) Failed Votes 1997, 1998 Competitive Liberalization 2001 Doha Drags On TPA Expiration 2007
5 Trade Agreements Approved under Fast Track Tokyo Round GATT Agreement 1979 U.S.-Israel FTA 1985 U.S.-Canada FTA 1988 North American Free Trade Agreement 1993 Uruguay Round WTO Agreement 1994 Trade Agreements in the Interim Period Jordan FTA
6 Trade Agreements Initiated Under Trade Promotion Authority Australia FTA Chile FTA Bahrain FTA 14 Agreements 26 Countries Andean Trade Promotion: Peru, Columbia, Ecuador, Bolivia CAFTA- DR: Costa Rica, Guatemala, Honduras, Nicaragua El Salvador & Dominican Republic Malaysia FTA Morocco FTA Oman FTA Panama FTA Republic of Korea FTA Singapore FTA Thailand FTA United Arab Emirates FTA Southern African Customs Union FTA: Botswana, Lesotho, Namibia, South Africa & Swaziland FTAA?
7 Agriculture 1 Voice in the Room, Similar General Trade Policy Discussions
8 Six Selection Criteria Guides for a Potential FTA Partner Country readiness. Country readiness involves the country s political will, trade capabilities, and rule of law systems. Economic/Commercial benefit. The interagency group reviews the likely economic benefit to the United States. Benefits to the broader trade liberalization strategy. This factor relates to the prospective FTA partner s overall support for U.S. trade goals. Compatibility with U.S. interests. A potential FTA partner is examined for its compatibility with broad U.S. interests, including its support for U.S. foreign policy positions. Congressional/Private-sector support. the extent to which a particular FTA selection has garnered support from the Congress, business groups, and civil society. U.S. government resource constraints. This factor focuses primarily on constraints at USTR what regional office is available to lead the negotiation, what staff are available, etc.
9 Keeping Up With the Jones's : Trade Preference Parity* Chile Everything But Arms (EBA) policy provides 42 LDCs dutyfree access to EU markets without quota or other restrictions for all agricultural primary and processed products. * See CAFTA Report for Detail Analysis of Effects Africa, Caribbean, and Pacific (ACP) preferences. FTAs are with Chile and MERCOSUR (Brazil, Argentina, Paraguay, anduruguay).
10 Seam State Argument, Thomas Barnett, U.S. Naval War College
11 Some Specifics Part 2 What Benefit/Cost Competitive Liberalization? NFTA CAFTA Proposed RKUS Agreement Special Products / Foreshadowing
12 Value of U.S. Agricultural Exports by Destination 2005, $63. 2 Billion KOREA, REPUBLIC OF Others % Other FTA s Completed Or Initiated CENTRAL AMERICA % EUROPEAN UNION JAPAN CHINA, PEOPLES REPUB AUSTRALIA BAHRAIN % CHILE ISRAEL % JORDAN MOROCCO OMAN MALAYSIA SOUTH AFRICA, REPUBL SINGAPORE % NORTH AMERICA (NAFTA) UNITED ARAB EMIRATES THAILAND VIETNAM
13 Value of U.S. Agricultural Imports by Origin 2005, $59.3 Billion AUSTRALIA Other FTA's % CENTRAL AMERICA % 4% 22% EUROPEAN UNION % CHINA, PEOPLES REPUB % 24% NORTH AMERICA Others
14
15 Commodity/Country Agreement Specific Details
16 1994 Implementation, 15 Year Phase In, 2009;
17
18 Still Some Disharmony in Certain Areas Open Border for Sugar in 2008 Likely Dust Up on the Way U.S. Immigration Policy and Mexican (Calderon) Politics on Shaky Ground: Failed Candidate (Obrador) Platform to Renegotiate NAFTA
19 CAFTA Average Bound Tariff on Agricultural Imports % Costa Rica Dominican Republic El Salvador Guatemala Honduras Nicaragua For U.S. 99 % of all Agricultural Products from CAFTA Countries Enter Duty Free
20 Source: Paggi,Yamazaki & Josling. The Central American Free Trade Agreement: What s At Stake for California Agriculture CATI Pub # , April 2005.
21 DR-CAFTA Demographics Country Pop. (mil) GDP/ Person Poverty % Lit. % Ag. Pop. % Costa Rica 3.9 $8, El Salvador 6.5 $4, Guatemala 13.9 $3, Honduras 6.7 $2, Nicaragua 5.1 $2, Dom. Rep. 8.7 $6, Total/Avg $4,
22 What s To Gain From RKUS - FTA $10.6 Billion Market 48 Million Increasingly Affluent Consumers Already U.S. Market $2.5 billion (25% share) Little Competition on the Import Side ( Mostly Imports of Textile & Apparel)
23 What s To Gain From RKUS - FTA
24 Figure 31 Korean Imports of Oranges, Fresh (HS ) from Major Countries: Million $ Year USA South Africa Australia China Chile New Zealand ROW
25 Korean Imports of Grapes, Fresh from Major Countries: Million $ Year Spike? Demand for Green As Well as Red U.S. up 62% Chile USA ROW Chile-RK FTA 4/04
26 FTA s Don t Solve Everything: Market Wildcards 12/23/03 BSE The Cow That Stole Christmas Dec. 24, 2003: Mexico, Russia, Brazil, South Africa, Hong Kong, Japan, Singapore, Taiwan, Malaysia and South Korea are among the countries to ban the import of American beef South Korea U.S. Beef & Beef Variety Meat Exports (Metric Tons) Lost/Anticipated 10/23/06 First 9 mts. In 3 years
27 Sensitive Product Provisions Ability to Negotiate Exceptions Foreshadowing for the Doha Round? Sugar Exemption in Australian Agreement Over-Quota Tariff Remains in CAFTA (2% annual increase in overall quota) Rice Likely Barrier to RKUS 7% by 2014 any More? Up from UR 4% by 2004
28 In Summary The US flurry of Activity of Late Due to Strategic Initiative, Sense of Urgency related to Expiration of TPA, Concern Over Progress in Multilateral Negotiations And Gaining Tariff Parity With Others Existing FTA s Large Contributor to Product Trade, Especially NAFTA, but Non-FTA Countries are Major Contributors to Imports and Dominate in Exports Potential Role of New FTA Participants Somewhat Limited Multilateral Initiative that Created Opportunities in EU, China and Japan Most Beneficial
29 Summary Regional and Bilateral Agreements Provide Some Advantages Not a Substitute for WTO (export subsidies, domestic subsidies) For the US Create Market Access With Little Additional Costs (CAFTA-DR Example) Ability to Craft Specifics to Deal With Sensitive Product Problems (US-Australia and the Phantom Sugar)
30 Thank You For Inviting Me to The Conference! Questions & Comments?
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