The Impact of NAFTA on Agricultural Commodity Trade: A Partial Equilibrium Analysis.

This paper examines the effects of the North American Free Trade Agreement on agricultural commodity trade using extensive data. The data cover agricultural exports and imports between the U.S. and NAFTA partners over the extended period of 1989-2010. The commodities covered in our analyses include; corn, soy bean, cotton, wheat, fresh vegetables, poultry, dairy products, and red meats. Since the signing of the agreement, U.S. total agricultural commodity trade with NAFTA members has increased three-fold from $18 billion in 1994 to$61 billion in 2010. A partial equilibrium model, in which we derive each trading partner's excess demand and excess supply, is used to study the impact of NAFTA on trade, controlling for other trade-inducing variables such as exchange rates, tariffs, per capita incomes, and relative prices. Regression results show mixed effects of NAFTA on different commodities while graphical and counterfactual analyses indicate strictly positive effects.NAFTA, Agricultural commodities, trade, partial equilibrium analysis, Agribusiness, Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade, Marketing,

Impact of Subsidies Across Alabama Counties: An Econometric Interpretation

Fixed effect time series effect models are used to analyze the spatial and time series pattern of the effects of subsidies on manufacturing income across twenty counties in Alabama from 1970 to 1999. The results from the fixed effect model indicate that median populated counties performed better than larger and smaller counties while the time series effect model indicates that the impact of subsidies is marginal across the state over time.Agricultural and Food Policy,

Chinese Market Access Barriers of U.S Oilseeds and Grains

China was admitted into the WTO in December 2001 and this raised the hopes of the US that China will open up to agricultural trade with the US. However, this potential has not been realized. The goal of this study is to determine the impacts of trade impediments and barriers of the market access of US oilseeds and grains in China. A market access variable that was obtained by dividing the total value of U.S soybean and corn exports to China by U.S agricultural G.D.P was regressed on China’s per capita income, exchange rate of the yuan to the dollar, arable land to labor ratio in the U.S and a dummy variable representing China’s WTO accession. The result found per capita income to have a positive impact on market access of U.S oilseeds and grains in China. Exchange rate of the yuan to the dollar was found to be significant and has a negative impact on market access. However, China’s WTO accession and the arable land to labor ratio in the U.S did not have any significance on the market access of U.S oilseeds and grains.Market Access, Market Access Barriers, U.S Oil seeds and Grains, Import, International Development, International Relations/Trade,

Impact of Expanded United States Sugar Imports from CAFTA Countries on the Ethanol Market

The need to decrease the United States’ dependency on oil has pushed ethanol to the forefront of energy sources. In the U.S., corn is used to make ethanol. Corn-based ethanol production has been profitable over the past few years, but there has been a near doubling of corn prices in late 2006 and early 2007 (Outlaw, et. al., 2007). The trend is a constant rise in prices, which has given way to ethanol production by other sources of raw materials like sugarcane. Sugarcane ethanol is the most cost-efficient biofuel available anywhere in the world, and in the United States, the government supports sugar prices. Through the US sugar policy, sugar prices are controlled, and foreign imports are severely limited. Brazil is leading the way in sugarcane ethanol, and its neighbors in Central America are following suit. In 2006, the Central American Free Trade Agreement (CAFTA) was established. The agreement allows sugar imports into the U.S. from these countries duty free. Those countries have extreme ethanol growth potential with low production costs and large sources of sugarcane. This paper uses GIS and statistical tools to determine the impact of the expanded U.S. sugar imports from CAFTA-DR countries on the U.S. ethanol market in terms of production and regional concentration. To estimate the relationship between ethanol production and sugar imports, an OLS regression model has been developed with monthly U.S. ethanol production as a function of imported sugarcane, gas, ethanol , and corn prices; covering January 2000 to September 2008.Ethanol, Sugarcane, Sugar, CAFTA-DR, Alternative Fuels, Biofuels, International Relations/Trade,

The Trade Effects of MERCOSUR and The Andean Community on U.S. Cotton Exports to CBI countries

The United States engagement in nonreciprocal preferential trade arrangements has been proliferating with several developing countries throughout the past couple of decades. One of the oldest and more successful of these arrangements has been the Caribbean Basin Initiative (CBI).The CBI is a general term used to refer to the Caribbean Basin Economic Recovery Act of 1983 (CBERA), the Caribbean Basin Economic Recovery Expansion Act of 1990 (CBERA Expansion Act), and the Caribbean Basin Trade Partnership of 2000 (CBTPA) (Ozden and Sharma 2006). The central premise behind the plan was that, by encouraging the CBI countries to become more open and liberal, trade would expand – and eventually translate into economic development and growth (Deere, 1990). The partnership between the U.S. and the CBI provides duty and quota free treatment for 1) textile and apparel products assembled from U.S. fabric in CBI beneficiary countries from U.S. fabric and 2) yarn and apparel assembled from CBI regional fabric, subject to a quantitative limit which increases over time. Cotton is a major commodity for the U.S. generating about $4-5 billion in annual cash receipts (Dodson 1995). Furthermore, cotton is a major raw material for the textile and apparel industries creating heavy dependence by these industries on cotton production. The demand for raw fiber is derived from consumer demand for textile products where cotton is an important textile fiber (Marseli and Epperson, 2002). This paper analyzes the effects these regional trade agreements have on CBI countries cotton imports from US by calculating the associated trade creation and trade diversion values.Panel data, trade diversion, trade creation, CBI, cotton imports, Agricultural and Food Policy, International Relations/Trade,

FTAA AND NORTH CAROLINA: INCOME REDISTRIBUTION ACROSS LABOR GROUPS

The specific factors model was used to determine potential adjustments due to FTAA on income redistribution among skilled labor groups in North Carolina. All wages but agriculture and manufacture labor are projected to rise. Returns to capital in service will increase while returns to capital in agriculture and manufacture fall.Labor and Human Capital,

Exchange Rates Impacts on Agricultural Inputs Prices using VAR

The effects of the U.S. dollar exchange rate versus the Mexican peso are evaluated for four traded nonfarm-produced inputs (fertilizer, chemicals, farm machinery, and feed) in the U.S. Unit root tests suggest that the exchange rate and the four input price ratios support the presence of unit roots with a trend model but the presence unit roots can be rejected in the first difference model. This result is consistent with a fixed price/flex price conceptual framework, with industrial prices more likely to be unresponsive to the exchange rate than farm commodity prices.exchange rate, pass-through, law of one price, SUR, VAR, Agribusiness, Financial Economics, International Relations/Trade, F14, F31, F36, F42, C23,

China-U.S. Potential Non-food Ethanol Exportation

To reduce national oil dependency, ethanol has been given a center stage of U.S. energy sources. The Renewable Fuel Standard (RFS) program was launched to increase the volume of renewable gasoline from 9 billion gallons in 2008 to 36 billion gallons by 2012, among which 15 billion are corn-based ethanol, while U.S. corn-based ethanol can hardly achieve this level. There is a trend that indicates U.S. importing ethanol from other countries, so a bilateral trade system has been established between U.S. and Brazil since 2003. The annual import is 211 million gallons in 2008 (USDC, 2009). Nevertheless, this amount is far away from the target, and the worldwide food shortage called us to divert our attention from fuel to food. China, as the third largest ethanol producer, has extreme ethanol growth potential with low production costs and large sources of cassava, which is a non-food feedstock for ethanol. This paper uses Data Envelopment Analysis (DEA) to measure and compare the efficiency of ethanol production in China and Brazil. To estimate the extent output can be proportionally expanded without altering the input quantities employed in each country. The output orientated method has been developed with annual ethanol production from the inputs-- land for ethanol crops, agricultural labor force and capacity of ethanol production. The DEA results show that China has been more efficient in ethanol production than Brazil since the year 2007. This means China has comparative advantage over Brazil in producing ethanol, hence U.S. can import from China instead of Brazil in the future.Ethanol, Efficiency, Non-food, Productivity, Feedstocks, Agricultural and Food Policy, International Relations/Trade, Productivity Analysis, Resource /Energy Economics and Policy,

A Foot and Mouth Disease Induced Model of US Excess Supply of Beef

Agriculture is a vulnerable sector of the U.S economy, accounting for 13% of Gross Domestic Product and 15% of employment. It produces quality cheap food for domestic consumption and accounts for more than $65 billion in export revenues. Contagious animal diseases like Foot and Mouth Disease (FMD) are often referred to as economic diseases because of the magnitude of harm they cause producers, local communities and the consequences in international trade. Losses from the 2001 FMD outbreak in the United Kingdom are estimated at$10.7 to $11.7 billion. The total cost of an FMD outbreak is the sum of eradication cost, production losses, and the loss of exports. This paper examines the export effects of a bioterrorist attack such as the introduction of FMD on the US beef industry. The context is to model the US beef market as a price taker on the international beef market, the simplifying “small open economy” assumption of international economics. Although, the beef market is linked to beef prices around the world, we tend to conceive of the US beef market in terms of domestic supply and demand and the resulting domestic equilibrium price. The excess supply of beef is the difference between quantities supplied and demanded that increases with price and responds to other influences on domestic supply and demand. We assumed that U.S consumers will exercise more caution when purchasing beef at grocery store as a result of the outbreak of FMD. As U.S consumers alter their diet, poultry and pork will become good substitutes with poultry having a higher demand than pork. The economic impact of FMD is simulated based on expected changes in price of beef and its substitutes based on three different scenarios of the levels of FMD occurrences.Excess supply, FMD, beef prices, bioterrorism, Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade, Q17,