1. 1 U.S. Trade Agreements with Chile and Andean Countries: Implications for FTAA? Jaime Malaga, Texas Tech University Flynn Adcock, Texas A&M University AAEA Meetings 2005, Providence, RI July 25, 2005

2. 2 Overview  FTAA Area and US Ag.Trade  US-Andean Trade Issues and Negotiations  Regional or Bilateral Agreements?  Implications of Alternative Strategies

3. 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?

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5. 5 USDA ERS FATUS Export Aggregations

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7. 7 CANADA42.3% MEXICO37.2% NAFTA 79.5% CHILE 0.5% 80.0% CAFTA-DR7.5% 87.4% ANDEAN 4.6% 92.0% OTHER6.4% 98.4% MERCOSUR1.6% TOTAL U.S. TO FTAA100.0% Data Source: USDA, FATUS Where are the U.S. Ag Exports to the FTAA Going? (2004)

8. 8 1990199520002004 SUMMARY OF TOP U.S. AG EXPORTS COMMODITIES TO FTAA58.4% 57.1%60.8% CORN 14.5%11.9%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% 42.9%39.2%

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11. 11 CANADA41.6% MEXICO26.4% NAFTA 68.0% CHILE 4.9% 72.90% CAFTA-DR9.0% 81.9% ANDEAN 7.7% 89.6% OTHER0.8% 90.4% MERCOSUR9.6% TOTAL U.S. TO FTAA100.0% Data Source: USDA, FATUS Where are the U.S. Ag Imports from the FTAA Coming From? (2004)

12. 12 1990199520002004 SUMMARY OF TOP U.S. AG IMPORTS COMMODITIES FROM FTAA72.0%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%

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15. 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. 16 US-Andean Agricultural Trade 1990-2005 US Imports US Exports

17. 17 US Ag. Exports to Andean Countries 1990-2005

18. 18 US Ag. Imports from Andean Countries 1990-2005 US Exports

19. 19 1990199520002004 Sum of Top (CAN) Commodities60.2%68.2%72.9%74.0% WHEAT41.9%27.4%19.3%27.3% CORN12.1%21.8%27.9%25.9% COTTON1.2%5.5%10.2%12.2% SOYBEANS0.0%1.2%2.9%3.3% SOYBEAN MEAL1.8%6.0%6.5%2.5% DAIRY PRODS0.81%1.42%1.50%1.31% POULTRY & PRODS1.79%3.15%2.91%0.94% RED MEAT & PRODS0.59%1.69%1.70%0.57% OTHER COMMODITIES39.8%31.8%27.0%25.9% USDA FATUS

20. 20 US Imports from Andean Countries 2004

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23. 23 U.S. Alternative Trade Strategies for the Region A.Go for FTAA (34 Countries) as originally planned B.Stop now (NAFTA and Chile only) and wait for WTO agreements C.Keep negotiating FTA with individual countries to get most of the FTTA area

24. 24 1990199520002004 EU-1517.9%15.0%12.2%10.7% FTAA23.3%24.3%35.4%37.3% Other58.8%60.7%52.5%52.0% The EU is reducing imports from the USA. The FTAA is increasing imports from the USA. Where are the USA AG Exports to the FTAA going? USDA ERS FATUS Export Aggregations

25. 25 USDA FAS Data Source: USDA, FATUS, 2004

26. 26 USDA FAS Data Source: USDA, FATUS, 2004

27. 27 USDA FAS Data Source: USDA, FATUS, 2004

28. 28 USDA FAS Data Source: USDA, FATUS, 2004

29. 29 USDA FAS Data Source: USDA, FATUS, 2004

30. 30 Summary FTAA Region increasingly important for US Ag Exports. FTAA negotiations slowed down and with bleak prospects because of Mercosur US FTA’s, 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. 31 UNSD Comtrade Database. 2003 Data

32. 32 UNSD Comtrade