Transcript Presentation

Free Trade of The Americas:
Issues and Prospects
The Andean Group
Jaime Malaga
Department of Agricultural and Applied Economics
Texas Tech University
Free Trade of the Americas, the WTO and New Farm Legislation
San Antonio, May 2002
Overview
•
•
•
•
•
The Economic Dimension of the Andean Countries
The “Andean Community” FTA-Customs Union
US-Andean Countries Trade
Socio Political Environment
FTAA: Issues and Perspectives
Andean Countries (AC)
Indicators
(2000)
AC
POPULATION
GDP $ BILLIONS
GDP/CAPITA
TRADE (X + M)
TRADE/GDP
MERCOSUR
MEXICO
119
578
5.0
100’
236
1816
7.7
209’
101
915
9.1
344’
17.3%
11.5%
37.5%
The Andean Community ACN
(Former Andean Pact)
• Created 1970
• Free Trade Area: Completed in 1993 (Except Peru)
• Customs Union: Partially in 1995 – Expected
Completion: 2003
• Common Market: Target year : 2005
• Bilateral Trade Agreements with Chile and Mexico
• Free Trade Agreements under negotiation with Mercosur,
EU.
The Andean Community ACN
(Former Andean Pact)- Results
• 0 Intra-region tariff since 1993 (except Peru)
• Intra-region exports grew 47 TIMES (1970-2000)
while exports to ROW grew 10 times.
• Common External Tariffs under negotiation: four
levels expected: 0, 5, 10 and 20 %
• System of “Price Bands” applied to 13
agricultural commodities (since 1995)
Andean Countries Total Imports by
Origin (2000)
JP
USA
32%
CHILE
MEX
MERSUR 9%
AC
14%
EU
16.4
%
Total Imports
40 US $ Billion
Andean Countries Total Imports
Average Annual Growth Rate 19912000 (%)
15.6 %
15.3%
Ja
pa
n
4.0%
EU
SA
U
To
ta
l
M
er
co
su
r
an
ad
a
C
AC
co
ex
i
M
hi
le
6.3%
C
C
hi
na
45
40
35
30
25
%
20
15
10
5
0
1.2%
Annual Direct Investment on Andean
Countries by Origin 1991-2000
(US $ Mill)
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
US
EU
CAN
91
92
93
94
95
96
97
98
99
0
US Ag. Exports to South America
1990-2000
3000
2500
Andean
Chile
Pa/Ur
Arg.
Brazil
2000
1500
ANDEAN COUNTRIES 70%
1000
500
0
90
91
92
93
94
95
96
97
98
99
0
US- AC Ag.Trade Balance 90-00
2500
2000
1500
US IMP
US EXP
1000
500
0
90
91
92
93
94
95
96
97
98
99
0
Andean Countries Import High % of
US Ag. Exports to South America
(2000)
•
•
•
•
•
•
•
•
SOYBEANS
SOYBEAN OIL
CORN
WHEAT
RICE
FRUITS
SOYBEAN MEAL
COTTON
100%
100%
90%
89%
86%
82%
62%
55%
US Share (%) of AC Ag. Imports
1998-99
60
38%
50
40
30
20
10
0
Bolivia
Colombia
Ecuador
Peru
Venezuela
Total
Problems and Issues
Political Instability
– Ecuador in 1999-2000
– Peru in 2001
– Venezuela: 2002
Social Unrest/Conflicts
- Colombia guerrrilas
- Colombia and Peru Drug Production
Different Levels of Market Liberalization/Policies
- Market oriented: Peru and Bolivia
-Government intervention: Ecuador Venezuela
- Dollarization in Ecuador
ATPA extension
ivia
u
6
5
4
3
2
% 1
0
-1
-2
-3
-4
Ch
ile
zue
la
AN
DE
AN
LA
TIN
AM
Arg
ent
ina
Bra
zil
Me
xic
o
Ven
e
Per
r
Ecu
ado
mb
ia
Col
o
Bol
Latin Am. GDP Growth Rates 2001 (%)
1.9
0.7
ivia
u
4
2
0
-2
%
-4
-6
-8
-10
Ch
ile
zue
la
AN
DE
AN
AT
IN
AM
Arg
ent
ina
Bra
zil
Me
xi c
o
Ven
e
Per
r
Ecu
ado
mb
ia
Col
o
Bol
Latin AM. GDP Growth Rate Expected
2002 (%)
2.5
1.0
Potential
Net Exporter of OIL (Venezuela, Colombia and Ecuador)
Immense Natural Gas Resources for Export ( Bolivia,
Peru)
Large Mining Projects under implementation (Peru,
Bolivia).
Vast Fishing Resources ( Peru , Ecuador)
Except Bolivia, scarce areas to expand agricultural frontier
If they are able to successfully address their political
problems investment and economic growth are possible
FTAA may generate basis for additional growth.
Income growth would result in food and agricultural import
demand.
Summary
• Andean Community (AC): More population than Mexico
and 50% of Mercosur
• GDP is 60% of Mexico’s
• Represents 70% of US Ag.Exports to South America
• US market share declining
• Political problems impede faster growth
• Large non-ag resource base
• Potential fast growth in demand for food imports
• Free Trade under negotiation with Mercosur and EU
U
S
FTAA: ESTIMATED EFFECTS ON AGRICULTURAL EXPORTS
Two Cases: With or Without the U.S.
CANADA
UNITED
STATES
BRAZIL
BOLIVIA
US
FTAA + U.S.
Canada
FTAA - U.S.
Mexico
Argentina
Brazil
Chile
C Am/Carib
Andean Group
Rest of world
-400
-200
0
200
400
$US Millions 1992
600
800
1,000