International Trade Issues & Texas Agriculture

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1 International Trade Issues & Texas Agriculture Parr Rosson Professor & Director Center for North American Studies Department of Agricultural Economics Texas A&M University

2 Trade Issues & Texas Agriculture WTO Negotiations Complete NAFTA Implementation Trade Agreements Cuba Export Opportunities Trade Disruptions

3 World Population 8 Billions ME AFR LA TOTAL NA WE I. ASIA EE/FSU D. ASIA Ind. + 8%, Dev. + 31% F2010 F2015 F2020 US Census Bureau

4 Global Insight, Inc., World Economic Outlook, $70 $60 $50 World Economic Output GDP, Trillion 1997 Dollars NA WE I. ASIA EE/FSU D. ASIA ME AFR CSA Ind. + 64%, Developing + 140% $40 $30 $20 $10 $ F2005 F2010 F2015 F2020

5 U.S. Tariffs, Percent 60 Tariff of Abominations, 1828 Smoot-Hawley Tariff, Morrill Act, 1861 Generalized System of Preferences, WTO, Statistical Abstract of the United States Fordney-McCumber Tariff, 1922 GATT,

6 Source: WTO & ERS/USDA World Average Agricultural Tariffs, 2002 Percent Region Average World Average % 10 0

7 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 U.S. Agricultural Trade, F Exports Imports Billion Dollars Source: U.S. Trade Internet System, Since 2000 Exports + 30% Imports + 50% $64.5 $ F Trade Surplus Shrinks $61.5

8 World Trade Organization Doha Development Agenda ( )? Agreement on Reductions by April 30, 2006 Did Not Happen Draft Schedules Due July 31, 2006? Conclude Negotiations December 31, 2006?? Trade Promotion Authority Expires July 2007

9 USDA On-line data base Top 10 U.S. Ag Export Markets, 2005 Canada Me xico Japan EU-25 China Tai wan Korea CAFTA-DR Turkey Indonesia $2.3 $2.2 $1.9 $1.1 $1.0 $9.4 $7.9 $6.8 $5.2 Billion Dollars $10.6

10 CUSTA, 89 CAFTA-DR 05 Jordan 01 Bahrain 05 NAFTA 94 Israel 85 Morocco 04 Thailand 06 Andean FTA 06 Panama 06 MEFTA 06 S. Korea FTAA? Singapore 03 Chile 04 Southern African Customs Union 06 U.S. Trade Agreements Australia 05

11 Real Growth in U.S. Exports to China and Rest of World, China Rest of World 2001, China Joins WTO = USDOC, Bureau of the Census. Index reflects change in exports based on year 2000 US dollars.

12 Bureau of Economic Analysis, Survey of Current Business, July Foreign Holdings of U.S. Treasury Securities Billion Dollars Japan China/Hong Kong Europe O ther $800 $694 $700 $600 $550 $500 $393 $400 $300 $200 $100 $223 $169 $141 $155 $131 $132 $281 $173 $239 $

13 Index base year 1990=100, reflects changes in exports in year 2000 U.S. Dollars. Real Growth in U.S. Ag Exports to China and ROW, China Rest of World 2001, China Joins WTO

14 Real Growth in U.S. Ag Exports to NAFTA 250 and ROW, NAFTA Rest of World 200 NAFTA Implemented, Asian Financial Crisis Index base year 1990=100, reflects changes in exports in year 2000 U.S. Dollars. ROW excludes NAFTA and China.

15 Top 5 Ag Export States, 2004 Iowa $3676 Illinois $3654 Texas $3363 Nebraska $3015 California $9197 Million Dollars USDA, Economic Research Service. Based on shares of national production and exports.

16 Texas Ag Exports, $4,000 Million Dollars $3,500 $3,000 $2,482 $2,554 $2,374 $2,850 $3,267 $3,367 $3,364 $2,982 $3,083 $2,500 $3,063 $2,883 $2,851 $3,419 $3,363 $2,500 $2,000 $1,500 $1,000 $500 $ USDA, Economic Research Service. Based on shares of national production and exports.

17 Composition of Texas Ag Exports, 2004 Cotton Feed Grains An im als/produ cts Wheat/Products Horticu ltu re Pou ltry Rice Dairy Peanuts O ther $271 $138 $136 $68 $46 $40 $156 $706 $694 Million Dollars $1,108 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 USDA, Economic Research Service. Based on national shares of production and exports.

18 Ag Exports $3,363 million Texas Ag Export Impacts Business Activity ($ M) $6,558 Income ($ M) $2,724 Jobs (#) 88,875

19 Economic Impacts of Texas Ag Exports, 2004 Congressional District Ag Exports Business Activity Income Employment Million Dollars Jobs C D C D C D C D C D C D C D C D C D C D IMPLAN and Center for North American Studies.

20 Observations Disparity in Population & Income Growth Disparity in Use of Trade Barriers Disparity in Agricultural Trade Growth China Emerging as Major Market & Economic Force

21 Observations Questions About Role & Future Importance of Trade WTO Agreement Important Open Markets Eliminate Export Subsidy Distortions Minimize Litigation Over Farm Policy Fruit/Vegetable Issues Ag Exports Important to Texas Economic Growth, but Concentrated in Certain Regions

22 Conclusions & Implications U.S. Market Is Open, Rest of World Is Not U.S. Export Growth Lags Import Growth If Trade Growth is Important, Disparities Must Be Addressed Progress in WTO Important to U.S. & Texas for at Least 2 Reasons: Markets Farm Policy

23 Conclusions & Implications Absent WTO Progress, Expect More Litigation in WTO Aimed at Farm U.S. Policy Trade Agreements Likely Important Way to Address Market Access Trade is Important Growth Component of Texas Economy

24 Thank You! Parr Rosson Department of Agricultural Economics Texas A&M University College Station, TX Telephone: