U.S. Trade Agreements with Chile and Andean Countries: Implications for FTAA? Jaime Malaga, Texas Tech University Flynn Adcock, Texas A

1
U.S. Trade Agreements withChile and Andean
Countries Implications for FTAA? Jaime
Malaga, Texas Tech University Flynn Adcock,
Texas AM UniversityAAEA Meetings 2005,
Providence, RIJuly 25, 2005
2
Overview

• FTAA Area and US Ag.Trade
• US-Andean Trade Issues and Negotiations
• Regional or Bilateral Agreements?
• Implications of Alternative Strategies

3
Free Trade Area of the Americas (FTAA)

• Launched at Summit of the Americas in Miami 1994
• Negotiations started in 1998
• 34 Countries involved (Cuba Excluded)
• Agreement was supposed to be ready for 2005. Slow
  progress
• US and Brazil are co-chairs of the Negotiation
  Committee
• Skepticism in most LA countries
• How important is the FTAA area for US agriculture?

4
(No Transcript)
5
USDA ERS FATUS Export Aggregations
6
(No Transcript)
7
Where are the U.S. Ag Exports to the FTAA Going?
(2004)
CANADA 42.3 MEXICO 37.2 NAFTA
79.5 CHILE 0.5 80.0 CAFTA-DR 7.5
87.4 ANDEAN 4.6
92.0 OTHER 6.4 98.4 MERCOSUR 1.6
TOTAL U.S. TO FTAA 100.0
Data Source USDA, FATUS
8
  1990 1995 2000 2004
SUMMARY OF TOP U.S. AG EXPORTS COMMODITIES TO FTAA 58.4 58.4 57.1 60.8
CORN 14.5 11.9 10.7 10.7
WHEAT 11.2 11.9 6.2 9.5
RED MEAT PRODS 6.0 3.9 9.8 9.4
SOYBEANS 5.5 7.7 7.2 6.7
COTTON 1.4 5.4 6.3 5.8
POULTRY PRODS 3.6 4.5 4.4 4.6
DAIRY PRODS 1.9 2.8 3.0 4.3
RICE 4.1 3.6 2.5 4.1
SOYBEAN MEAL 3.9 3.5 2.9 3.1
SORGHUM 6.5 3.2 4.1 2.6
OTHER COMMODITIES 41.6 41.6 42.9 39.2
9
(No Transcript)
10
(No Transcript)
11
Where are the U.S. Ag Imports from the FTAA
Coming From? (2004)
CANADA 41.6 MEXICO 26.4 NAFTA
68.0 CHILE 4.9 72.90 CAFTA-DR 9.0
81.9 ANDEAN 7.7
89.6 OTHER 0.8 90.4 MERCOSUR 9.6
TOTAL U.S. TO FTAA 100.0
Data Source USDA, FATUS
12
  1990 1995 2000 2004
SUMMARY OF TOP U.S. AG IMPORTS COMMODITIES FROM FTAA 72.0 71.7 71.0 73.8
VEGETABLES, FR/FZ 9.5 10.1 12.3 14.6
FRUITS, FR/FZ 13.6 13.3 13.5 13.4
RED MEATS PRODUCTS 8.4 7.4 10.0 10.9
GRAINS FEEDS 9.9 9.0 9.2 9.8
COFFEE 14.1 15.9 10.4 6.0
SUGAR/RELATED 5.6 5.5 4.7 5.3
MALT BEVERAGES 2.7 2.8 4.8 5.2
OILSEEDS PRODUCTS 5.1 4.7 3.5 4.7
COCOA/PRODUCTS 3.1 3.0 2.6 3.9
OTHER COMMODITIES 28.0 28.3 29.0 26.2
13
(No Transcript)
14
(No Transcript)
15
The Andean Countries and the US

• Andean Community Colombia, Bolivia, Peru,
  Ecuador, and Venezuela. The oldest free trade
  agreement in the Americas.
• Same population as Mexico, but 65 of Mexican
  economy.
• Trade openness 50 of Mexico
• U.S. Andean Act ATPDEA preferential trade
  agreement ending in 2006.
• Negotiations with Mercosur to create a South
  American Free Trade Area, or Common Market
• Colombia, Peru, Bolivia, and Ecuador negotiating
  a FTA with U.S. since May 2004. Last round to be
  in Oct 2005.

16
US-Andean Agricultural Trade1990-2005
US Imports
US Exports
17
US Ag. Exports to Andean Countries 1990-2005
18
US Ag. Imports from Andean Countries 1990-2005
US Exports
19
  1990 1995 2000 2004
Sum of Top (CAN) Commodities 60.2 68.2 72.9 74.0
WHEAT 41.9 27.4 19.3 27.3
CORN 12.1 21.8 27.9 25.9
COTTON 1.2 5.5 10.2 12.2
SOYBEANS 0.0 1.2 2.9 3.3
SOYBEAN MEAL 1.8 6.0 6.5 2.5
DAIRY PRODS 0.81 1.42 1.50 1.31
POULTRY PRODS 1.79 3.15 2.91 0.94
RED MEAT PRODS 0.59 1.69 1.70 0.57
OTHER COMMODITIES 39.8 31.8 27.0 25.9
USDA FATUS
20
US Imports from Andean Countries 2004
21
(No Transcript)
22
(No Transcript)
23
U.S. Alternative Trade Strategiesfor the Region

1. Go for FTAA (34 Countries) as originally planned
2. Stop now (NAFTA and Chile only) and wait for WTO
   agreements
3. Keep negotiating FTA with individual countries to
   get most of the FTTA area

24
The EU is reducing imports from the USA. The
FTAA is increasing imports from the USA.
1990 1995 2000 2004
EU-15 17.9 15.0 12.2 10.7
FTAA 23.3 24.3 35.4 37.3
Other 58.8 60.7 52.5 52.0
Where are the USA AG Exports to the FTAA going?
USDA ERS FATUS Export Aggregations
25
USDA FAS
Data Source USDA, FATUS, 2004
26
USDA FAS
Data Source USDA, FATUS, 2004
27
USDA FAS
Data Source USDA, FATUS, 2004
28
USDA FAS
Data Source USDA, FATUS, 2004
29
USDA FAS
Data Source USDA, FATUS, 2004
30
Summary

• FTAA Region increasingly important for US Ag
  Exports.
• FTAA negotiations slowed down and with bleak
  prospects because of Mercosur
• US FTAs, signed (NAFTA Chile) and under
  negotiation (CAFTA Andean) represent 92 of US
  Ag exports.
• Andean about to sign FTA agreement with Mercosur
• Best US strategy might be to keep signing
  bilateral FTAs in the region to accomplish the
  goal of a FTTA

31
UNSD Comtrade Database. 2003 Data
32
UNSD Comtrade