Rosson, C. Parr, III

English

Research Papers in Economics

CHOICES
The magazine of food, farm, and resource issues
2nd Quarter 2005 • 20(2) CHOICES 129
A publication of the
American Agricultural
Economics Association
2nd Quarter 2005 • 20(2)
©1999–2005 CHOICES. All rights reserved. Articles may be reproduced or electronically distributed as long as attribution to Choices and the American
Agricultural Economics Association is maintained. Choices subscriptions are free and can be obtained through http://www.choicesmagazine.org.
Forces Shaping Trade: The WTO, Trade 
Agreements, and Market Integration
By C. Parr Rosson III
International trade is of major importance to US agricul-
ture, with exports accounting for 25% of all harvested
acres and nearly one third of farm cash receipts in most
years. Since March 2000, the members of the World Trade
Organization (WTO) have been engaged in negotiations
to reform agricultural and trade policies among all 148
members. Furthermore, the WTO Dispute Settlement
Body issued findings against the US cotton program and
export credit guarantees in March 2005. Additionally, the
United States has implemented eight trade agreements and
is now negotiating eight others. The Central American
Free Trade Agreement–Dominican Republic (CAFTA-
DR) is presently being considered by the US Congress and
will likely be voted upon this summer. In addition, the
North American Free Trade Agreement (NAFTA), imple-
mented in 1994, has spurred market integration among
businesses and communities in Canada, Mexico, and the
United States.
This issue of Choices  provides an overview of these
major forces, emphasizing the present status of each, pros-
pects for the outcomes and likely implications for the
future of US farm and trade policies. Progress and pros-
pects for a successful Doha Round of multilateral trade
negotiations are examined. Although WTO negotiations
have been tenuous at times, some progress has been made.
The Doha Work Program, agreed to in July 2004, pro-
vides that export subsidies must be eliminated and that
total allowable trade-distorting domestic support must be
reduced 20% in the first year of implementation. The
elimination of export subsidies alone would be significant,
absent other reforms.
The WTO cotton case against the United States, DS-
267, is discussed, along with an overview of the findings
and implications for US farm programs and trade policy.
The Step 2 component of the program was ruled to be in
violation of WTO rules along with export credit guarantee
programs. It is likely that the process to bring both of these
programs into compliance must begin by July 1, 2005.
Restrictions on planting fruits and vegetables on program
acres were ruled to render direct payments to US produc-
ers out of compliance with WTO Green Box criteria. Mar-
keting loan payments and other major program payments
were also ruled to depress prices and cause damage to cot-
ton farmers in Brazil. These and other elements of the case
are examined and discussed.
With a congressional vote on CAFTA-DR likely this
summer, the trade agreement article examines the major
provisions of the agreement, the likely impacts on US agri-
culture, and prospects for the future. Costa Rica, El Salva-
dor, Dominican Republic, Guatemala, Honduras, and
Nicaragua are members of this regional trade agreement.
Although CAFTA-DR has modest near-term potential, its
long-term prospects depend on income growth, develop-
ment of infrastructure, and economic growth in the
region.
Despite the discovery of bovine spongiform encephal-
opathy (BSE), outbreaks of avian flu, numerous anti-
dumping petitions, and other disruptions to trade, North
American agricultural markets are more closely integrated
Articles in this Theme:
Forces Shaping Trade: The WTO, Trade Agreements, and 
Market Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
The WTO Agricultural Negotiations: Progress and Prospects. 
131
Regional Trade Agreements and Implications for US 
Agriculture: The Case of CAFTA-DR . . . . . . . . . . . . . . . . 137
The WTO Cotton Case and US Domestic Policy  . . . . . . . . . . 143
Food Chain Disruptions and Trade: The Importance of North 
American Market Integration . . . . . . . . . . . . . . . . . . . . 149130 CHOICES 2nd Quarter 2005 • 20(2)
than in the past. Although many
attribute this to NAFTA, evidence
indicates that the trend toward devel-
oping a single agricultural market
began in the mid-1980s, as US com-
panies invested in feedlots and pack-
ing facilities in Canada. Greater
market integration, however, has
exacerbated the negative impacts of
recent animal disease outbreaks and
called into question the extent to
which deep integration will continue
in North America.
Contributors to these articles
were Timothy Josling, Darren Hud-
son, Jaime Malaga, John Robinson,
Mickey Paggi, Lynn Kennedy,
Fumiko Yamazaki, and Flynn
Adcock.
C. Parr Rosson III is a professor,
extension economist, and director of
the Center for North American Stud-
ies, Department of Agricultural Eco-
nomics, Texas A&M University,
College Station, Texas.

Forces Shaping Trade: The WTO, Trade Agreements, and Market Integration

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