If trade growth is important to Texas and U.S. farmers, the huge disparity in market access between the United States and much of the rest of the world must diminish.
“The U.S. market is open, the rest of the world is not,” said Parr Rosson, professor and director of the Center for North American Studies, part of the department of agricultural economics at Texas A&M University.
Rosson discussed international trade issues recently at the 2006 Texas Ag Forum in San Antonio, Texas.
Market access imbalances, Rosson said, puts U.S. export growth at a serious disadvantage. “Currently, U.S. export growth lags import growth,” he said.
For those reasons, he concluded that progress in World Trade Organization negotiations is critical. He said failure to make progress in WTO will have implications for U.S. markets and U.S. farm policy.
“The WTO agreement is important,” he said, “to open markets, eliminate export subsidy distortions, minimize litigation over farm policy and to deal with fruit and vegetable issues.
“Absent WTO progress, expect more litigation in WTO aimed at U.S. farm policy,” Rosson said.
He said U.S. tariffs have remained low since 1947, following the General Agreement on Tariffs and Trade (GATT). Currently, U.S. tariffs are around 10 percent. That compares to 30 percent for the European Union, 40 percent for South America, 55 percent for Central America, 85 percent for the Caribbean Islands and a whopping 115 percent for Asia.
That disparity has resulted in a shrinking surplus of U.S. agricultural trade. “Since 2000, exports (agriculture) have risen by 30 percent,” Rosson said, “but imports have gone up 50 percent.”
Trade agreements do help. He said U.S. exports to China following China's entry into the WTO has risen substantially compared to exports to the rest of the world. Primary export commodities to China include cotton, soybeans, hides and skins and wheat.
“Trade is an important component for growth of the Texas economy,” Rosson said.
Texas exported more than $3.3 billion in agricultural products in 2004. Cotton, at $1.1 billion tops the list, followed by feed grains at $706 million, animals and animal products at $694 million and wheat and wheat products at $271 million.
Other exported commodities important to the Texas ag economy include horticulture products, poultry, rice, dairy and peanuts.
Those sales result in more than $6.5 million in business activity, more than $2.7 million in income and more than 88,800 jobs.
China provides a critical outlet for U.S. agricultural products.
“China represents a major market and an economic force,” Rosson said. China currently holds more than $280 billion in U.S. Debt and is second to Japan, which holds more than $690 billion of U.S. debt.