ECONOMICS OF DETECTION AND CONTROL OF INVASIVE SPECIES: WORKSHOP HIGHLIGHTS

Invasive species are species that are not native to an ecosystem, and when introduced into the new ecosystem, they cause economic or environmental damage. Trade is one way in which these species are introduced into new regions, and as trade increases, the introduction of invasive species also rises. The Center for Agricultural Policy and Trade Studies, North Dakota State University, held a workshop on April 30, 2004 in Fargo, ND, titled ?Economics of Detection and Control of Invasive Species? to address these issues. The purpose of this workshop was to present current findings on the subject of invasive species in agricultural trade and to structure the model for an in-depth research project examining this issue. Speakers included experts from the Animal Plant Health Inspection Service and the Economic Research Service of the U.S. Department of Agriculture and from U.S. Customs and Border Patrol, as well as professors of economics from North Dakota State University and other academic institutions. Discussion included the impact of invasive species on agricultural production and trade, the tools used by the U.S. Department of Agriculture and U.S. Customs and Border patrol to detect and control incoming species, and the creation of econometric models to capture and explain these processes and to analyze policy issues. This report contains abstracts from the presentations given at the workshop.Resource /Energy Economics and Policy,

POTENTIAL EFFECTS ON U.S. CATTLE AND BEEF PRICES FROM REOPENING THE BORDERS

U.S. trade of beef and live cattle has declined substantially since the discoveries of bovine spongiform encephalopathy (BSE) in Canada and the United States in 2003. Imports of live cattle from Canada resumed in July 2005, but U.S. beef exports remained substantially below pre-BSE levels as important export markets in Japan and Korea were not regained. The removal of the ban on Canadian imports and the eventual lifting of bans to export markets could affect U.S. cattle and beef prices. In this study, an econometric model is developed and estimated to determine the effects of lifting trade restrictions on cattle and beef prices. Results show that if net cattle imports from Canada increase to 1.5 million animals per year, with beef imports held constant, the slaughter steer, feeder steer, and retail beef prices would decrease $4.65/cwt,$5.31/cwt, and 6.55 cents/lb, respectively. However, the drop in prices from increased imports would be more than negated if beef exports returned to near previous levels. If beef exports increased to 100 percent of the 2003 level, slaughter steer, feeder steer, and retail beef prices could increase by $7.83/cwt,$8.95/cwt, and 16.0 cents/lb, respectively.bovine spongiform encephalopathy, beef exports, cattle imports, prices, Livestock Production/Industries,

PROCESSED FOOD TRADE AND FOREIGN DIRECT INVESTMENT UNDER NAFTA

Trade in processed food products is rapidly growing. Trade with Canada and Mexico has especially been growing since free trade agreements have been implemented. The U.S. presence in the processed food industry in other countries through foreign direct investment (FDI) is also large and has been expanding. The relationship between trade and FDI is uncertain and subject to much debate. Japan and Canada are the largest importers of processed foods from the United States, followed by Mexico and Korea. Canada is the leading exporter of food products to the United States, followed by France, Mexico, and Italy. Canada and Mexico have, in recent years, become increasingly important trading partners in processed foods. Results from this study do not conclusively indicate any type of relationship between FDI and trade. Trade in processed foods also appears to be mostly insensitive to the exchange rate. Some of the increase in trade flows can be explained by growth in real GDP. Trade liberalization may also explain the increase in trade flows. Free trade agreements have positively influenced U.S. FDI in Canada and Mexico. Labor cost and inflation in the host country also influences U.S. FDI.trade, processed foods, foreign direct investment, Canada, Mexico, International Relations/Trade,

U.S. AGRICULTURAL TRADE WITH WESTERN HEMISPHERE COUNTRIES AND THE EFFECT OF THE FREE TRADE AREA OF THE AMERICAS

Negotiations to create the largest single market in the world, the Free Trade Area of the Americas (FTAA), are in progress. Such an agreement could have significant effects on U.S. agriculture; it could create an opportunity to increase U.S. exports of agricultural commodities and products, and could also lead to an increase in imports. The objective of this study is to analyze U.S. agricultural trade with Western Hemisphere countries and to determine the effects of hemisphere-wide trade liberalization. The Western Hemisphere contains important sources for U.S. agricultural imports and important markets for U.S. agricultural exports, though the hemisphere has been more important as a source for imports than as a market for exports. Results suggest that U.S. agricultural exports within the hemisphere are positively influenced by real GDP in the importing country and negatively influenced by the strength of the U.S. dollar and tariffs in importing countries. U.S. agricultural imports are positively affected by the strength of the U.S. dollar and negatively affected by U.S. tariffs. A reduction in tariffs under the FTAA would have a greater effect on U.S. agricultural exports than it would on U.S. agricultural imports because tariffs are generally larger in other countries and food consumption is more price sensitive in other countries.Free Trade Area of the Americas, trade liberalization, Western Hemisphere, agricultural trade., International Relations/Trade,

CANADIAN EXPORTS OF WHEAT AND BARLEY TO THE UNITED STATES AND ITS IMPACTS ON U.S. DOMESTIC PRICES

Canadian exports of wheat and barley to the United States have increased significantly since the late 1980s. The objectives of this study are to determine the factors that affect trade flows of hard red spring wheat, durum wheat, malting barley, and feed barley from Canada to the United States and to evaluate the impacts of Canadian wheat and barley exports on the U.S. domestic prices of these commodities. Major factors affecting trade flows of these commodities from Canada to the United States include the exchange rate, quality differences, differences in market size, the U.S. Export Enhancement Program, the elimination of Canadian rail subsidies, and trade liberalization under the Canada - United States Free Trade Agreement of 1989 (CUSTA). These factors have positively influenced Canadian exports, resulting in major increases in Canadian exports of agricultural commodities to the United States. The increased Canadian exports have resulted in reduced U.S. domestic prices of wheat.bilateral trade, free trade agreement, wheat, barley, farm price, International Relations/Trade,

U.S. PROCESSED FOOD EXPORTS AND FOREIGN DIRECT INVESTMENT IN THE WESTERN HEMISPHERE

U.S. exports of processed food products and sales by foreign affiliates of U.S. companies in the industry have been growing rapidly. Canada and Mexico are the United States' two major trading partners in the Western Hemisphere, while small quantities of processed food products are exported to a number of other countries in the hemisphere. U.S. Foreign Direct Investment (FDI), like exports, is also largest in Canada and Mexico, but there is also significant FDI in the processed food industry in South American countries such as Brazil and Argentina. U.S. FDI, measured as sales by foreign affiliates, is significantly greater than U.S. processed food exports. The relationship between FDI and trade is subject to much debate and analysis. An econometric model is developed and estimated to determine the factors affecting U.S. processed food exports and sales by affiliates in eight Western Hemisphere countries, as well as the relationship between exports and FDI. Results suggest that U.S. FDI and exports are complements. U.S. exports are also positively influenced by real GDP in the importing country and are negatively influenced by tariffs. There are also large regional differences in U.S. exports after economic variables are accounted for. U.S. exports are higher to Canada and, to a lesser extent, Mexico and are lower to Brazil and Argentina. U.S. FDI is positively influenced by real GDP in the host country, which indicates that U.S. firms invest in countries with greater market opportunities. FDI is negatively influenced by exchange rate volatility, which indicates that U.S. firms try to avoid unstable economies. Free trade agreements with Canada and Mexico also have significant positive effects on U.S. FDI. Results indicate that taking advantage of lower labor costs is not a motivating factor for U.S. firms, and that the real exchange rate does not have a significant effect on either FDI or exports.processed foods, foreign direct investment, Western Hemisphere, International Relations/Trade,

CHARACTERISTICS OF THE DECLINING U.S. AGRICULTURAL TRADE SURPLUS

The U.S. agricultural trade surplus has fallen from $26.9 billion in 1996 to$7.3 billion in 2004, and it is shrinking even further in 2005. The objective of this paper is to examine the characteristics of the decreasing agricultural trade surplus and determine the factors causing this decline. U.S. imports from Canada and Mexico have more than doubled under NAFTA, and imports from non-NAFTA countries have also increased considerably. Most increases in imports are consumer-ready and horticultural products. U.S. exports to Canada and Mexico have also been increasing steadily, but exports to other important markets have been stagnant or declining. Much of the declining trade surplus can be accounted for by trade with the European Union. Results from an econometric analysis indicate that an increase in disposable income and free trade agreements have contributed significantly to the increase in U.S. imports of consumer-oriented products. U.S. exports are found to be significantly influenced by per capita income and free trade agreements. Moreover, a strong U.S. dollar is found to have had a negative impact on the value of exports of consumer-oriented products, but not bulk or intermediate products. Results show that exports of bulk and intermediate products have been trending downward while exports of consumer-oriented products and imports of intermediate and consumer-oriented products have been trending upward.agricultural trade balance, free trade agreements, consumer-oriented products, International Relations/Trade,

FORCES RESHAPING WORLD AGRICULTURE

This paper examines many of the forces reshaping world agriculture. Among these forces are increased trade liberalization, agricultural research and development, and new movements in developing countries. Worldwide agricultural production is likely to become more competitive as a result of increased trade liberalization through the World Trade Organization and regional and bilateral free trade agreements. Countries can become more competitive through agricultural research and development. As a result of research and development, total agricultural production has increased significantly across the world over the last several decades. Agricultural research has also led to the development of many new, non-food uses for agricultural products. New movements in developing countries include the substantial increases in agricultural production in Brazil and Argentina, and increases in consumption in China and other countries.globalization, research and development, productivity, biofuels, Brazil, food demand, International Relations/Trade,

AN OVERVIEW OF CUBAN AGRICULTURE AND PROSPECTS FOR FUTURE TRADE WITH THE UNITED STATES

For many years, the United States has blocked trade with Cuba, but the situation has recently changed. The Trade Sanctions Reform and Export Enhancement Act of 2000 loosened U.S. sanctions on agricultural exports to Cuba, allowing Cuba to buy from the United States using cash but not credit. The objectives of this study are to analyze Cuban agricultural production and trade and to estimate potential agricultural trade flows that could occur between the United States and Cuba if the embargo was completely lifted. The effects of various increases in Cuban GDP on Cuban import demand are also analyzed. Cuba could be a significant market for U.S. exports of wheat, wheat flour, rice, corn, pulses, poultry, and dairy products, while the United States would likely import sugar, citrus, and tobacco products from Cuba.Cuba, embargo, agricultural trade potential, International Relations/Trade,

AGRICULTURAL COMPETITIVENESS AND CHANGE UNDER GLOBALIZATION

Dr. Won W. Koo, Professor and Director of the Center for Agricultural Policy and Trade Studies, North Dakota State University, and Dr. G. Edward Schuh, Professor and Director of the Freeman Center for International Economic Policy, University of Minnesota, organized a conference, Agricultural Competitiveness and Change under Globalization, held October 11-12, 2004, at the Ramada Plaza Suites and Conference Center in Fargo, North Dakota. Speakers included Senators Byron Dorgan and Kent Conrad of North Dakota, leaders from agribusinesses and farm groups, government officials, and top economists from universities across the country. The conference focused on the effects of globalization on U.S. agriculture, with attention given to trade negotiations and the issues and challenges facing U.S. agriculture. U.S. competitiveness and the emergence of Brazil and Argentina as major agricultural exporters was discussed, as were other emerging issues such as agro-terrorism and border protection, the impact of globalization on the environment, and commodity and energy policies. Sponsors of this conference included Farm Foundation; the Department of Agribusiness and Applied Economics, North Dakota State University; the Center for North American Studies, Louisiana State University and Texas A&M University; North Dakota Farm Bureau; and North Dakota Farmers Union.International Relations/Trade,