Lessons Learned from Other Blocs: The NAFTA Experience

1
Lessons Learned from Other Blocs The NAFTA
Experience
First CAMIC Workshop San José, Costa
Rica November 5-7, 2007
Rene F. Ochoa Dirección General de Estudios
Agropecuarios y Pesqueros Subsecretaría de
Fomento a los Agronegocios
2
Agenda

• Characteristics of NAFTA
• North America a strong market
• The experiences under NAFTA
• What to focus on
• Conclusions

3
NAFTA What is and what is not

• Free trade agreement
• Tariff removal
• Policy agreement
• Migratory agreement
• Customs Union

4
The North American market is one of the most
important around the world.

• Each of these economies rank among the top in the
  world
• Together, these three countries produce more than
  15 trillion dollars annually
• There are more than 430 million consumers
• GDP per capita (US dollars)
• Mexico 8,000
• Canada 39,135
• United States 44,300

5
NAFTA boosted agricultural trade
SOURCE USDA

• Agricultural trade under NAFTA has grown 7
  annual rate
• Today, agricultural trade surpasses 40 billion
  dollars a year

6
Trade evolution within NAFTA

• Since NAFTA
• Trade between US and Canada has more than double
• Mexicos trade with the US increased more than
  150
• Mexico and Canada agricultural trade is small,
  but it is growing at an increasing rate

7
Mexicos trade agreements

• Mexico has signed 12 Trade Agreements around the
  world

Mexican Exports by Trade Agreement
Million dollars
NAFTA

• NAFTA is by far the most important, followed by
  the EU trade agreement

EU
8
Mexican agrifood trade increment

• However, under more integration we would expect
  higher trade

• Since 1994, Mexican agrifood exports to the world
  increased more than 120 and 150 to North America

9
NAFTA overall growth in US Agricultural Exports

• The US exports would be greatly benefited under a
  higher level of integration

10
NAFTA needs to move forward to the next level of
integration

• Improving agricultural policy harmonization
  among the
• three countries
• Developing compatible sanitary, phytosanitary
  and food
• security policies to achieve a common
  sanitary region
• A North America wide agreement is needed to
  address
• biosecurity and supply chain issues
• Promoting agribusiness within the region
• Fostering research and innovation of North
  American
• products

11
NAFTA Challenges for the next stage

• Technical trade barriers
• Fostered by tariff removal
• Inspection, certification, and labeling issues
• Sanitary and phytosanitary issues
• Agricultural policies
• In order to stimulate competitiveness,
  coordination and harmonization of agricultural
  policies must be promoted

12
NAFTA needs to compete as a region

• The traditional vision of trade, based on the
  competing advantages by country is changing.
• Now, the new global competition comes in economic
  regional blocks
• A condition to insert NAFTA in the new global
  market forces us to further integrate our markets

13
Sanitary frontier Eradication programs
Swine Fever
Aujesky Disease
Newcastle
Avian Influenza
14
We need to face structural changes and challenges
as a region

• Sanitary and phytosanitary
• Mad cow disease (EEB)
• Avian influenza (H5N1)
• Biofuels
• Food vs. fuel
• Agricultural policy
• Farm bill 2007/2008

15
Positioning North American Agriculture for Global
Competition needs efficient policy

• Policy the key

16
Strategies and policies

• Product standardization
• Policy harmonization
• Scientific cooperation vs. politics
• Trilateral working groups

17
Conclusions

• For CAFTA to work Win-Win situation
• Signing an agreement is the first step of a
  journey
• Trade in the same terms and conditions
• Within/across countries
• Comparative advantages
• Value added
• Production and processing costs

18
Conclusions

• Do not wait on structural change
• Proactive vs. reactive
• Safety net for those left behind
• Sanitary and phytosanitary
• Easy to stop trade, difficult to re-establish
• Joint laboratories
• Joint training
• Supranatural authority
• Think/Work as a bloc
• Multilateral vs. bilateral

Época de cambios vs. Cambio de Época
19
The North American market as one bloc

• Integration
• Trade
• Economic
• Policy
• Policy coordination
• Equivalence agreements
• Harmonization

20
(No Transcript)