Transcript C Trade Negotiations & U.S. Agriculture: Prospects & Issues for the

Trade Negotiations & U.S.
Agriculture:
Prospects & Issues for the
Future
Parr Rosson
Professor & Director
Center for North American Studies
Department of Agricultural Economics
Texas A&M University
C
NAS
Overview
International Setting & Trade Strategy
Role of Trade Agreements
The World Trade Organization
Negotiations in Doha Development Agenda
DS 267, ‘Cotton Case’
Conclusions & Implications
International Setting &
Trade Strategy
World Population
Billions
ME
NA
8
AFR
WE
LA
I. ASIA
Ind. + 8%, Dev. + 31%
TOTAL
EE/FSU
8
7,570
D. ASIA
6,310
6
6
4
China, India,
Indonesia
4
2
2
0
0
1990
2000
US Census Bureau
2001
F2005
F2010
F2015
F2020
GDP Growth Projections
% Change From Previous Year
7
5.6
4.9
6
4.6
4.5
4.4
4.3
4.2
4.1
5
4
4
4
3.9
3.2
2.5
3
2
2.5
2.5
2.4
Developed Countries
2.4
2.4
2.4
2.4
2.4
2.3
Developing Countries
1
0
2004
2006
2008
2010
2012
2014
Source: International Financial Statistics January 2005 and projections after 2004 are from Global Insight
(formerly DRI-WEFA), FAPRI 2005 U.S. And World Agricultural Outlook.
Regional GDP Growth Projections
6
% Change From Previous Year


5


4
3




















Africa
Asia





Latin America
2




 Middle







East
China + 6.5%
India + 5.4%
1
0
2004




2006
2008
2010
2012
2014
Source: International Financial Statistics January 2005 and projections after 2004 are from Global Insight
(formerly DRI-WEFA),FAPRI 2005 U.S. And World Agricultural Outlook.
Regional GDP Growth Projections
8
% Change from Previous Year



6 








4

CIS



 EU



Other















E. Europe
2
0
2004
2006
2008
2010
2012
Source: International Financial Statistics January 2005 and projections after 2004 are from Global Insight
(formerly DRI-WEFA),FAPRI 2005 U.S. And World Agricultural Outlook.
2014
U.S. Agricultural Trade, 1970 - 2005E
$80.0
Billion Dollars
Imports
Exports 
Balance


 
 



$40.0
  










$20.0


$60.0
$0.0




-$20.0




-$40.0




-$60.0
1970
1975
1980
1985
1990
Source: U.S. Trade Internet Sys tem, www.fas .us da.gov/us trade
1995
2000
2005E
U.S. Tariffs, 1789-2004
70
Percent
70
Tariff of Abominations, 1828
Smoot-Hawley Tariff, 1930
60
60
Morrill Act, 1861
50
50
Generalized System
of Preferences, 1968
40
30
WTO,
1995
20
10
40
30
20
Fordney-McCumber
Tariff, 1922
10
GATT, 1947
0
1789 1816 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Statistical Abstract of the United States
0
World Average Agricultural Tariffs, 2002
Percent
140
Region Average
World Average
114
120
100
85
62%
80
55
60
40
20
0
Source: WTO & ERS/USDA
40
30
25
12
U.S. Trade Strategy
Unilateral
Generalized System of Preferences (GSP)
CBI/CBERA
African Growth Opportunities Act (AGOA)
Regional/Bilateral
NAFTA, CAFTA-DR, Others
Multilateral
Concurrent
Initiatives
World Trade Organization
Only Forum Where All 148 Countries Are Present &
Farm Policy Is Negotiated
Progress to Date
CUSTA, ‘89
Jordan ‘01 Bahrain ’06?
CAFTA-DR
NAFTA ‘94
Israel ‘85
’06? Morocco ’06?
Thailand ’06?
Panama ‘06
MEFTA
‘06
Andean FTA
‘06
FTAA ‘06
Singapore ‘03
Chile ‘04
Southern African
Customs Union ‘06
U.S. Trade Agreements
Australia ‘05
Trade Agreements In-Place (7)
Israel-1985-1994
Canada-US (CUSTA)1989-1998
North America
(NAFTA)-1994-2008
US-Mexico
US-Canada
Canada-Mexico
Jordan-December
17, 2001-2010
Chile-January 1,
2004-2015
Singapore-May 6
2003-2012
Australia-January 1,
2005-2022
Trade Agreements-Pending (9)
Morocco-President
Signed 8/17/04, Pending
Signature, King of
Morocco
CAFTA-DR-Signed by
President, Passed El
Salvador, Guatemala,
Honduras (20 Years)
Bahrain-Pending
Submission to Congress
Panama-Nine
Negotiating Sessions
Held, Panama Delays
Colombia, Ecuador,
Peru (ANDEAN)Nine Rounds,
Negotiations Continue
Thailand-Three
Rounds Held
Trade Agreements-Pending (9)
Southern African Customs Union
(SACU): Botswana, Namibia, Lesotho,
Swaziland, South Africa-Six Rounds
Held
Oman-Two Rounds of Negotiations
Held, Part of Middle East Free Trade
Area (MEFTA)
United Arab Emirates-Two Rounds
Held, part of MEFTA
Why Regional Agreements?
2d Best After MTN
WTO Has Been Slower than Desired
Outcome is Uncertain
Economic Incentives
Open Markets
Increase Business Efficiency
Keep Pressure on MTN to Perform
Any One Agreement-Small Impact,
Taken Together-Large Impact
Strategic Considerations
Secure Key Strategic Materials
Oil, Fertilizer, Natural Gas
Stem Illegal Immigration by Creating
Economic Opportunity in Other Countries
Create ‘Buffer Zone’ Against Terrorism
(Thomas Barnett & 9/11 Commission
Report)
Doha Development Agenda in the
World Trade Organization (2001-?
Preparing for the Hong
Kong Ministerial
December 8-13, 2005
Three Pillars of Trade Reform
(Agreed in Concept August 1, 2004)
Market Access: Reductions in
Tariffs
Export Competition: Elimination
of Export Subsidies
Trade Distorting Domestic
Support: Reductions Over Time
Market Access
Highest Tariffs Cut the Most
U.S. Pushing for Deep Tariff Cuts by
Developing Countries (60-75%)
Issue: Many Developing Countries
Want ‘Special’ Treatment & Some
Reluctant to Agree to Large Cuts
Much Left ‘To Be Negotiated’ & A
Potential ‘Deal Breaker’
Export Competition
Reduce & Eliminate Export Subsidies
by Date Certain (Agreed)
EU Export Subsidies, $2+ Billion/Year
U.S. Export Credit Guarantees > 180 Days
Food Aid to Be Disciplined
Strong Support for Export Competition
Reforms
Trade Distorting Domestic Support
Programs that Cause Production to Be Different
than Would Be Without Programs
Year 1 Cut of 20%
Subsequent Phased Reductions
• 40-50% Range
Reductions from Allowable Support
Issue: Developing Countries Wanted Cuts
Now, Tariff Reductions Later
If Big 3 Don’t Make Substantial Cuts, A ‘Deal
Breaker’
Agricultural Producer Support By Country
1986-88 and 2001-03
-Percent of Total Farm Receipts from Government1986-1988
2001-2003
80%
71%
65%
62% 60%
60%
40% 39%
33%
40%
26%
20%
20%
20%
12%
2%
0%
New Zealand
Canada
United States
Source: OECD's database (see www.oecd.org)
EU
Japan
Korea
Total Allowable Trade Distorting Domestic
Support, 'The Big 3,‘ 2002
Billion $
$140
$128
Includes Amber + Blue Boxes, Product Specific
+ Non-product Specific De Minimis, Each Based
on 5% of Total Value of Agricultural Production
$120
$100
$80
$49
$60
$48
$40
$20
$0
European Union
WTO, Trade Policy Review and calculations.
United States
Japan
Total Trade Distorting Domestic Support Remaining
After Year 1 Down Payment (calculated)
Billion $
$120.0
$100.2
$100.0
$80.0
$60.0
$39.2
$38.4
$40.0
$20.0
$0.0
European Union
United States
Japan
Total Trade Distorting Domestic Support
Assuming 50 Percent Reduction
$60.0
$50.1
-Billion Dollars-
$50.0
$40.0
$30.0
$19.6
$19.2
United States
Japan
$20.0
$10.0
$0.0
European Union
Calculated
Real Income Effects of Liberalization of Global
Merchandise Trade, by Country, 2015
-Impacts in 2015 Relative to the Baseline (2001 dollars)-Billion Dollars-
$350.0
$277.9
$300.0
$250.0
$190.9
$200.0
$142.1
$150.0
$100.0
$60.4
$50.0
$52.2
$44.2
$12.3
$10.9
$12.9
$0.0
EU 25
Japan
United States
Korea and
Taiwan
Brazil
Middle East
Source: Anderson, Martin and van der Mensbrugghe (2005a, Table 12.3)
World Total
High-income
Countries Developing
Countries
Impacts of Doha on Agricultural Output and
Employment Growth, by Country, 2005-2015
-Annual Average Growth Rate (Percent)6%
Output
4.3%
4.4%
4.4%
Employment
4%
1.7%
2%
1.6%
1%
0%
2.2%
1.1%
-0.4%
-1.4%
-2%
-1.4%
-2.1%
-2.8%
-4%
-4.1%
-6%
Canada
EU 25
United States
Korea and Taiwan
Japan
New Zealand
Brazil
Source: Anderson, Martin and van Mensbrugghe (2005a, Tables 12.12 and 12.13)
Trade Liberalization Impacts on Factor Prices, 2015
Skilled Wages
Unskilled
Wages
Land Owner
Rent
Inflation
Percent Change
EU 25
1.3
-0.1
-71
-1.2
United States
0.2
0
-24
-0.3
Japan
2.4
1.5
-67.2
-0.2
Korea and Taiwan
7.8
7.3
-45.8
-1.3
Brazil
1.4
2.8
35.9
2.8
Sub-Saharan Africa
5.7
8.4
6.4
-4.3
Thailand
6.3
13.4
12.5
-0.2
Vietnam
15.1
23.3
5.8
-0.2
New Zealand
1.1
3.5
20.9
1.5
Large
Gains
Anderson, Martin, and van der Mensbrugghe (2005a, Table 12.7).
Conclusions and Implications
Conclusions & Implications
U.S. Market Is Open, Rest of World Is Not
U.S. Export Growth Lags Import Growth
Agricultural Trade Distorted by Tariffs, Export
Subsidies, Trade Distorting Domestic Support
U.S. Pushing for Deep Tariff Cuts by
Developing Countries To Open More Markets
for U.S. Exports
Little Agreement on How Much Tariffs Might
Be Cut
Conclusions & Implications
Reductions in Trade Distorting Domestic
Support Likely Substantial
Some Adjustment for U.S. Producers
Absent WTO Progress, World Trade &
Economic Growth Stifled, Especially in
Agriculture-Not Good for U.S. Agriculture
Cotton Case Could Figure in Outcome
U.S. Response
Other Cases (Rice, Soybeans??)
Trade Reform is at a Crossroads: Protection or
Progress?
If Export Markets Are Important, Trade Agreements & WTO Progress
Are Necessary
Thank You!
C
NAS
Questions?
Parr Rosson
Department of Agricultural Economics
Texas A&M University
College Station, TX 77843-2124
E-mail: [email protected]
Telephone: 979-845-3070
C
NAS