1. Shrinking the Gap: Potential Roles of the WTO & Trade Agreements Parr Rosson, Professor & Director Center for North American Studies Department of Agricultural Economics Texas A&M University C NAS

2. US Trade Strategy Multilateral Trade Negotiations  World Trade Organization Regional Trade Agreements  Central American Free Trade Agreement Bilateral Trade Agreements  US-Australia Trade Agreement

3. Australia ‘04 Bahrain ‘04 CAFTA ‘04 Chile ‘04 FTAA ‘06 Morocco ‘04 Southern African Customs Union ‘05 Singapore ‘03 Jordan ‘03 U.S. Trade Agreements-3d Largest Market NAFTA ‘94 Israel ‘85 CUSTA, ‘89 Andean FTA ‘05 Panama ‘05 Thailand ‘05

4. Why Regional Agreements? 2d Best Solution After MTN  Slow Progress in WTO  Cancun Ministerial Derailed Progress  FTAA ‘Lite’ Not As Appealing Economic Incentives  Open Markets  Create Economies of Scale  Increase Business Efficiency

5. Strategic Considerations Stem Illegal Immigration Secure Strategic Materials  Oil/Natural Gas  Fertilizer Create Buffer Against Terrorism  ‘Seam State’ Argument, Thomas Barnett, U.S. Naval War College (New Rule Sets Project2000) http://www.nwc.navy.mil/newrulesets/

6. 199020002001F2005F2010F2015F2020 0 2 4 6 8 0 2 4 6 8 NAWEI. ASIAEE/FSUD. ASIA MEAFRCSATOTAL Billions 6,310 7,570 Ind. + 8%, Dev. + 31%

7. GDP, Trillion 1997 Dollars Ind. + 64%, Developing + 140%

8. MEAFRCSA Quad. Btu 1 2 1 2 Ind. + 28%, Developing + 69% (2001-2020)

9. Million Barrels/Day

10. Million Barrels/Day (Avg.) 1980198519901993NAFTA199519972000200120022003 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 NAFTANon-OPEC (Ex. NAFTA)OPEC Million Barrels/Day

11. U.S. Crude Oil Imports by Country, 2002 Source: Energy Situation Analysis Report 1.70 1.51 1.49 1.40 0.78 0.59 0.43 0.21 0.98 South America Saudi Arabia Mexico Canada North Sea Nigeria Iraq Other Persian Gulf Other 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Million Barrels/Day

12. 19901993199520002002 0.0 5.0 10.0 15.0 20.0 CanadaW. EuropeROW Million Metric Tons

13. U.S. Fertilizer Imports from ROW, 2002 1291 438 394 289 216 178 160 88 72 31 Russia/Belarus Trinidad/Tobago Saudi Arabia Qatar Bahrain Venezuela Egypt Lithuania Morocco Kuwait 0 200 400 600 800 1000 1200 1400 1600 1,000 Metric Tons

14. Background The Pentagon’s New Map & Esquire March 2003 Security in a Post Cold War Era  New Operating Environment Post September 11, 2001 World  Role of Security in Global Age Global Disconnect: Gap Between Functioning Core & Nonintegrating Gap Nations

15. Globalization: What Does It Mean? Integration of Economies & Societies Global Rule Set Democracy Transparency & Rule of Law Free Trade

16. Globalization & Development Does Globalization Have Binary Outcomes?  Great, Everyone Better Off  Horrid, Failing Humanity Neither, But In Between? Where Has Globalization Worked?  China, India, 22 Others, + 5% PCI, 3 Billion People Where Has It Not Worked?  Sub-Saharan Africa, Middle East, Former Soviet Union, Declining PCI, 2 Billion People Source: World Development Report, 2001

19. Globalization & Security New Security Paradigm: Disconnectedness Defines Danger Outlaw Regimes Disconnected from Globalizing World  Few or No Rules  Different Societal Norms  Lack Ties of Mutual Dependence

20. Assumptions: Old & New US Military Capable of Handling Threat from Great Power Can Handle Threat from Minor Conflicts in LDCs September 11 Redefined Perception of the Threat US Military Response Inversely Related to a Country’s Global Connectedness

21. Conditions in The Functioning Core Free Media & Press Open Financial Transactions Collective Security Stable Governments Rising Living Standards More Deaths by Suicide than Murder

22. Conditions in The Non-integrating Gap Politically Repressive Regimes Poverty, Hunger & Disease Routine Mass Murder Young Population Chronic Conflicts, Spawning Next Generation of Terrorists

23. Implications Global Disconnect Means Foes Not Near Peer, Not Even a Nation  ‘Super Empowered Individuals’ They Are Products of ‘The Gap’ To Thwart Threat, ‘Seam States’ are Critically Important  Mexico, Central America, Brazil, Thailand, Malaysia Seam States Are the “Firewall”

24. Implications Shrinking the ‘Gap’ is Crucial Middle East Is the Starting Point Policy Goals and Role of Trade?  Security-within nations  Increased Aid (Military, Food, Infrastructure, Development)  Democracy  Freer Trade  Rule of Law  Education (Human Capital)

25. The Doha Work Program

26. U.S. Average Tariff, 1789-2002 Statistical Abstract of the United States 178918161820184018601880190019201940196019802000 0 10 20 30 40 50 60 70 Percent 0 10 20 30 40 50 60 70 Tariff of Abominations, 1828 Morrill Act, 1861 Smoot-Hawley Tariff, 1930 Generalized System of Preferences, 1968 Fordney-McCumber Tariff, 1922 GATT, 1947 WTO, 1995 1789

27. World Average Agricultural Tariffs, 2000 115 85 55 40 30 25 12 South Asia Caribbean Islands Central America South America European Union North America United States 0 20 40 60 80 100 120 140 Bound Average World Average 62% Percent

28. Doha Development Agenda Economic Development Issues Affecting Less Developed and Developing Countries at Forefront of Negotiations Agriculture Negotiations Began in 2000  Uruguay Round Agreement on Agriculture After Setback in Cancun-September 2003, Consensus Reached on Work Program, July 31, 2004

29. Doha Work Program (DWP) Provides Framework for Negotiations to Proceed Modalities To Be Negotiated  Procedure & Degree of Trade Liberalization For Agriculture, Negotiations Center on DDA Reform of the Three Pillars  Market Access  Export Competition  Domestic Support

30. Market Access Tiered Approach  High Tariffs Reduced the Most Tariff Reductions from Bound Rates  Harbinson 2d Draft Likely Starting Point Designation of Sensitive Products Special & Differential Treatment for LDCs & Developing Countries  Longer Time Frame, Less Reduction

31. Export Competition Reduce & Phase Out Export Subsidies by Date Certain  Export Credit Guarantees > 180 Days  $4.7 Billion/year in Recent Years  t.b.n. Interest Rates, Premiums, Payment Eliminate Trade Distorting Practices of State Traders, such as Canadian Wheat Board  Subsidies, Govt. Financing, Loss Coverage Food Aid that Displaces Commercial Sales to Be Eliminated

32. Domestic Support Biggest Spenders Take Biggest Cuts  Tiered Formula Using Total AMS  EU ($71 Billion), Japan, US ($49 Billion) 20% Reduction in Allowable Trade Distorting Support in Year 1  Amber Box + De Minimis + Blue Box = $49 Billion  $9.8 Billion Reduction for US  No Impacts on US Farm Program Spending at Current Levels ($23 Billion/Year)  If Prices Fall & Spending Exceeds $39.2 Billion, then Program Impacts

33. Domestic Support Blue Box: Direct Payments, Production Limiting Programs or Decoupled Payments  Direct Payments, Fixed Area & Yield Base or 85% of Fixed Base  Create a ‘New’ Category (Shelter CCPs)  Other Changes t.b.n. Green Box: Minimally Trade Distorting  Criteria Reviewed & Clarified  Ensure Only Minimally Trade Distorting Policies Included  Likely Remain a Shelter for Non-trade Concerns (Multifunctionality, etc.)

34. Issues Are More Trade Agreements a Desirable Outcome? Without Trade Agreements, U.S. Market Access Limited  With Agreements, No Guarantee of Market Growth Investment & Economic Development Crucial for Central America & Many Other Trading Partners

35. Conclusions U.S. Market Much More Open than Others With Trade Agreements, Tariffs Will Fall, U.S. Access to Foreign Markets Will Increase Opportunity for Input On Agreements

36. Thank You! Informed Decisions for Global Change” Parr Rosson Ph: 979-845-3070 E-mail: prosson@tamu.edu Center for North American Studies Http://cnas.tamu.edu Video of WTO & Trade Agreements