1. Free Trade of the Americas: What's at Stake for Agriculture
John E. Link
Mary E. Burfisher
Economic Research Service
USDA
Thanks for inviting us…..
This presentation is based on work that ERS has been doing for the past couple of years

2. FTAA: Implications for Agriculture
The effects of trade liberalization
Influence of regional trade pacts on the FTAA
FTAA and the WTO
3 aspects of an FTAA are important.
---- 1st ---- the effects of an FTAA on agricultural trade -- those effects were looked at using a static & a dynamic CGE model
---- 2nd ---- look at the influence of regional trade pacts on the FTAA
---- & 3rd -- look at the FTAA & the WTO
Keep in mind that the Western Hemisphere is unique in having numerous trade pacts.

3. Change in Agricultural Exports by Country
These are the results of a “static” CGE model -- it does not reflect any changes in productivity or investment, just effects of tariff removal.
Numbers refer to changes in annual level of trade.

4. Effects on U.S. Agricultural Exports, by Destination
Canada should see an improvement in trade balance -- more export growth than import growth.

5. Change in Agricultural Imports by Country

6. Effects on U.S. Agricultural Imports, by Source

7. Dynamic Effects of FTAA
Lower trade barriers promote imports that embody technological change and productivity improvements
Lower trade barriers stimulate trade and investment, helping to raise productivity
Dynamic gains could be greater than static gains
2 channels for “dynamic effects”.

8. RTA's in the Hemisphere
Hemisphere has long history of RTAs. While earlier agreements were often protectionist, more recent ones have a different character.

9. Features of RTA's in the Western Hemisphere
Some exclude agriculture (CACM, ALADI, G-3)
Some include agriculture (NAFTA, MERCOSUR, CARICOM)
Some are negotiating as blocs (MERCOSUR, Andean Group, CARICOM)
So an FTAA will go much further, “all tariffs are on the table”, including those in agriculture.
U.S. agriculture may be hurt as an outsider to the agreements

10. Blocs within the FTAA
Blocs within the FTAA are solidifying some issues (small economies)
Some blocs (Andean group, CARICOM) could face more export competition with expansion to FTAA (but so far remain committed to FTAA)
“small economies” are concerned with issues like special & differential treatment and technical assistance in handling negotiations & implementing SPS (sanitary & phyo-sanitary)

11. FTAA and the WTO
Interrelated but distinct processes, FTAA maintains own timetable
FTAA as bloc within WTO promotes:
WTO action on export subsidies
Full inclusion of small economies
Full implementation of Uruguay Round
Active multilateral WTO negotiations
Maintaing its own timetable, the FTAA process will continue despite some faltering of WTO.
The FTAA is beginning to solidify as a bloc, altho the U.S. is negotiating independently.

12. Conclusions
FTAA continues to make progress toward achieving a Hemisphere-wide free trade area in which “all tariffs” are subject to negotiation.
RTA’s like the FTAA may become a more important path to free trade as WTO process slows.