Presentation is loading. Please wait.

Presentation is loading. Please wait.

Vermont Commission on International Trade and State Sovereignty Overview of International Trade and Its Impact on Vermonts Agricultural Sector Vermonts.

Similar presentations


Presentation on theme: "Vermont Commission on International Trade and State Sovereignty Overview of International Trade and Its Impact on Vermonts Agricultural Sector Vermonts."— Presentation transcript:

1 Vermont Commission on International Trade and State Sovereignty Overview of International Trade and Its Impact on Vermonts Agricultural Sector Vermonts Agricultural Sector Vermont Legislative Council December 18, 2007

2 2 What Is International Trade and What Are International Trade Agreements? (1) International trade is the exchange of goods and services across international boundaries or territories. International trade is the exchange of goods and services across international boundaries or territories. International trade traditionally was conducted according to agreements between two countries, referred to as bilateral agreements. International trade traditionally was conducted according to agreements between two countries, referred to as bilateral agreements.

3 3 What Is International Trade and What Are International Trade Agreements? (2) In 1944 at Bretton Woods, trade began to be considered in a global manner and global economic institutions were created to help regulate its conduct. In 1944 at Bretton Woods, trade began to be considered in a global manner and global economic institutions were created to help regulate its conduct. These organizations include: These organizations include: The World Bank The World Bank The International Monetary Fund (IMF) The International Monetary Fund (IMF) The Global Agreement on Tariffs and Trade (GATT) The Global Agreement on Tariffs and Trade (GATT)

4 4 In 1994, the Uruguay Round global trade discussions were completed and the World Trade Organization (WTO) was created. The WTO now has 149 members. In 1994, the Uruguay Round global trade discussions were completed and the World Trade Organization (WTO) was created. The WTO now has 149 members. WTO agreements include: WTO agreements include: Goods Goods Services Services Government procurement Government procurement Agriculture Agriculture Intellectual property rights Intellectual property rights A binding dispute resolution system A binding dispute resolution system More than a dozen separate agreements More than a dozen separate agreements What Is International Trade and What Are International Trade Agreements? (3)

5 5 The International Trading System in the U.S. … In 1974, Fast Track authority was established, streamlining congressional consideration of trade bills. In 1974, Fast Track authority was established, streamlining congressional consideration of trade bills. In 1979, the office of U.S. Trade Representative (USTR) was created by Executive Order. USTR is part of the Executive Office of the President. It is not subject to Freedom Of Information Act (FOIA) requests. In 1979, the office of U.S. Trade Representative (USTR) was created by Executive Order. USTR is part of the Executive Office of the President. It is not subject to Freedom Of Information Act (FOIA) requests. The USTR consults states through: The USTR consults states through: the Inter-Governmental Policy Advisory Committee (IGPAC) one of 36 advisory committees and the only one with members from state and local governments the Inter-Governmental Policy Advisory Committee (IGPAC) one of 36 advisory committees and the only one with members from state and local governments State Single Points of Contact (SPOCs) appointed by the governor in each state. State Single Points of Contact (SPOCs) appointed by the governor in each state.

6 6 International Trade Agreements Enacted since the Uruguay Round North American Free Trade Agreement (NAFTA) U.S.–Singapore Free Trade Agreement U.S.–Chile Free Trade Agreement U.S.–Australia Free Trade Agreement Central American Free Trade Agreement (CAFTA) U.S.–Peru Trade Promotion Agreement

7 7 Agriculture at the WTO (1) Disciplines on Agriculture exempted from the first six rounds of GATT trade talks (late 1940s–mid 1980s) Disciplines on Agriculture exempted from the first six rounds of GATT trade talks (late 1940s–mid 1980s) Uruguay Round establishes WTO (1995) Uruguay Round establishes WTO (1995) Built-In Agenda at the WTO includes talks on agriculture, services, and intellectual property rights Built-In Agenda at the WTO includes talks on agriculture, services, and intellectual property rights Binding dispute resolution system at the WTO Binding dispute resolution system at the WTO Negotiating blocs: Cairns Group, G-77, G-20, The Quad Negotiating blocs: Cairns Group, G-77, G-20, The Quad

8 8 Agriculture at the WTO (2) Disagreements on agriculture were major reason for collapse of WTO ministerial meetings in Seattle and Cancun Disagreements on agriculture were major reason for collapse of WTO ministerial meetings in Seattle and Cancun Collapse of Doha Round avoided through adoption of new Framework Agreement (July 2004) Collapse of Doha Round avoided through adoption of new Framework Agreement (July 2004) WTO ministerials: December 2005 (Hong Kong); Doha round scheduled for completion in December 2006 WTO ministerials: December 2005 (Hong Kong); Doha round scheduled for completion in December 2006 Doha beyond completion date; negotiations continue Doha beyond completion date; negotiations continue The Boxes The Pillars Prohibited/Amber Box Market Access Blue Box Tariffs Green Box Subsidies

9 9 Trade Context: How WTO Dispute Resolution Works Initial Consultations Initial Consultations Resolved at this stage? If no: Formation of a Dispute Resolution Panel (DRP) under WTO auspices Formation of a Dispute Resolution Panel (DRP) under WTO auspices Submissions by both WTO parties to the DRP (U.S., Brazil) Submissions by both WTO parties to the DRP (U.S., Brazil) Initial DRP decision Initial DRP decision Decision appealed? If yes: Appellate Body decision Appellate Body decision Claim upheld? If yes: Certification of decision by WTO Dispute Settlement Body Certification of decision by WTO Dispute Settlement Body Options for retaliation by winning party Options for retaliation by winning party

10 10 Trade Context: WTO Brazil Cotton Case Trade Context: WTO Brazil Cotton Case WTO Dispute Resolution Panel (DRP) ruling: U.S. subsidies cause serious prejudice to Brazilian cotton producersU.S. subsidies cause serious prejudice to Brazilian cotton producers $1.5B doesnt qualify as Green Box$1.5B doesnt qualify as Green Box Step Two payments are prohibited subsidyStep Two payments are prohibited subsidy U.S. appeals decision Appellate Body upholds DRP findings Dispute Settlement Body (DSB) adopts Appellate Body report U.S. eliminates Step Two programs and changes export subsidy programs says changes mean U.S. now in compliance with WTO ruling Collapse of Doha Round Brazil requests that WTO set up compliance panel to review whether U.S. has implemented DSB ruling June 2004 October 04 3 March 05 21 March 05 early 2006 July 2006 Sept 2006 With respect to some of the rulings, the U.S. has adopted no implementation measures at all. –Brazil Trade Ministry

11 11 Trade Context: Brazils Retaliation Trade Context: Brazils Retaliation Cotton sanctions aimed at non-agriculture sectors amount to $3 billion of intellectual property rights (pharmaceutical patents, software, industrial design, etc.) Weakness of U.S. agricultural sector in trade negotiations: U.S. economy 79% services 19% industry 1% agriculture 1% agriculture U.S. rural economy 3.1% agriculture

12 12 Next Steps in US-Brazil Cotton Case United States says it will comply with WTO ruling Compliance mechanism is domestic legislation: Farm Bill, appropriations process But…compliance choices are difficult: Cut cotton subsidies specifically? Cut cotton subsidies specifically? Broad-based reduction in spending? Broad-based reduction in spending? Preserving amber/blue box subsidies at the expense of green box programs? Preserving amber/blue box subsidies at the expense of green box programs? Dont comply, take the hit from Brazils retaliation? Dont comply, take the hit from Brazils retaliation?

13 13 Equity in US Farm Support Programs Current supports are skewed… By region By crop By farm size Farms in the Northeast produce 7% of U.S. agricultural products yet receive less than 1% of federal subsidies Producers of just five crops have secured more than 90% of federal farm handouts Nationally, just 10 % of farmers collect more than 70% of subsidies In New England, only 11% of farmers receive federal support

14 14 WTO Consistency: Box Shifting WTO Consistency: Box Shifting Prohibited Export credits Domestic use Trade distorting Commodity subsidies Cotton Cotton Rice Rice Corn Corn Wheat Wheat Soy Soy Questionable Opposed by G20 nations as trade-distorting Payments to farmers Direct payments Direct payments Counter-cyclical payments Counter-cyclical payments Not trade distorting Not opposed by G20 Rural development Supporting entrepreneurs Capitalizing on-farm energy resources Conservation and working landscapes Conversion

15 15 Green Box Programs that Help Vermont Farmers CREP (Conservation Reserve Enhancement Program) EQUIP (Environmental Quality Incentives Program) Funding for Lake Champlain and impaired watershed cleanup FPP (Farmland Protection Program) AMA (Agricultural Management Assistance) Specialty crop block grants Organic Certification Cost Share Organic Transition Assistance Fresh Fruit and Vegetable Program Renewable Energy for America Programs Rural Development Grants

16 16 Vermont Programs That Could Be Challenged Buy Local Campaign Buy Local Campaign Farm To School Programs Farm To School Programs State Purchase Preference State Purchase Preference Dairy Target Price Program Dairy Target Price Program CWT (Cooperatives Working Together) Export Program CWT (Cooperatives Working Together) Export Program State of Vermont Pure Maple Syrup Trademark State of Vermont Pure Maple Syrup Trademark Federal MILC (Milk Income Loss Contract) Program Federal MILC (Milk Income Loss Contract) Program

17 17 U.S.–Peru Trade Promotion Agreement Benefits to New England Farmers (1) Exports support 4,900 on- and off-farm jobs in food processing, storage, and transportation. In 2006, $434 million in agricultural exports generated $2.3 billion in farm cash receipts. Dairy exports of $41 million generated $573 million in farm cash receipts. All Peruvian duties on dairy products will be eliminated within 17 years, some earlier. Fruit generates $52 million in cash receipts. Peruvian duties on apples will be eliminated.

18 18 U.S.–Peru Trade Promotion Agreement Benefits to New England Farmers (2) Beef generates $80 million in farm cash receipts. Duties on Prime and Choice cuts will be eliminated. Limited quantities of offals immediately become duty-free; greater quantities phase into being duty- free. Maple products generate $22 million in farm cash receipts. Peru will immediately eliminate duties on maple syrup and maple sugar. Current duties are 12% and, under WTO rules without USPTPA, could rise to 30%. USDA Foreign Agricultural Service web site, Fact Sheet: U.S.–Peru Trade Promotion Agreement - New England Farmers Will Benefit, November 2007

19 19 Advantages and Challenges Facing U.S. Products in Peru (1) Advantages Upcoming U.S.–Peru TPA will grant duty free access to two-thirds of U.S. food and agricultural products Upcoming U.S.–Peru TPA will grant duty free access to two-thirds of U.S. food and agricultural products Open market for previously banned products (beef, offals, poultry, pork) Open market for previously banned products (beef, offals, poultry, pork) Growing food processing and HRI sectors that will demand more food ingredients Growing food processing and HRI sectors that will demand more food ingredients Proactive supermarket industry that will result in increased demand for high-value products Proactive supermarket industry that will result in increased demand for high-value productsChallenges Peru negotiating trade agreements with other countries, which could lessen competitive advantage of the U.S. Peru negotiating trade agreements with other countries, which could lessen competitive advantage of the U.S. Consumer habits: Peruvians prefer meals based on fresh products and spicy seasonings Consumer habits: Peruvians prefer meals based on fresh products and spicy seasonings Lack of brand awareness among consumers Lack of brand awareness among consumers New local food brands appearing in the market at very low prices New local food brands appearing in the market at very low prices

20 20 Advantages and Challenges Facing U.S. Products in Peru (2) Advantages Increased tourism creates new opportunities for food service development Increased tourism creates new opportunities for food service development Fast food chains expanding in major cities Fast food chains expanding in major cities Appreciation for U.S. food quality and culture Appreciation for U.S. food quality and culture People are becoming aware of diet, lite and healthy food products through media People are becoming aware of diet, lite and healthy food products through mediaChallenges Relatively small market due to limited purchasing power; 76 percent of Peruvian population are low-income consumers Relatively small market due to limited purchasing power; 76 percent of Peruvian population are low-income consumers Supermarkets, the main source of imported food products, account for only 24 percent of total retail food sales in Lima Supermarkets, the main source of imported food products, account for only 24 percent of total retail food sales in Lima Government Buy Peruvian campaign encourages purchase of local products Government Buy Peruvian campaign encourages purchase of local products Smuggling Smuggling Source: USDA Foreign Agricultural Service GAIN Report PE6022

21 21 Potential Problems for Peru (1) Agriculture generates 31% of all employment and 7.6% of GDP in Peru Agriculture generates 31% of all employment and 7.6% of GDP in Peru Women comprise 50% of Perus agri-export (flowers, asparagus, artichokes) workforce Women comprise 50% of Perus agri-export (flowers, asparagus, artichokes) workforce Common complaints include the up-to-12-hour work days, temporary contracts, a ban on unions, violations of reproductive and labor rights Common complaints include the up-to-12-hour work days, temporary contracts, a ban on unions, violations of reproductive and labor rights Challenges for Peruvian agricultural workers include lack of alternative employment, limited access to markets and credit, lack of basic services, adverse climatic conditions, and geographic isolation Challenges for Peruvian agricultural workers include lack of alternative employment, limited access to markets and credit, lack of basic services, adverse climatic conditions, and geographic isolation

22 22 Potential Problems for Peru (2) Lacking economic alternatives, farmers may turn to coca cultivation Lacking economic alternatives, farmers may turn to coca cultivation Special products for Peru are rice, maize, wheat, oil seeds, sugar, meat, cotton, dairy products, and barley. These products provide an income for millions of farmers in rural areas. Special products for Peru are rice, maize, wheat, oil seeds, sugar, meat, cotton, dairy products, and barley. These products provide an income for millions of farmers in rural areas. Special products that have been protected by the price band system would be threatened by U.S. subsidized agricultural imports. Special products that have been protected by the price band system would be threatened by U.S. subsidized agricultural imports. Source: Song of the Sirens, Oxfam Briefing Paper, June 2006

23 23 The Commission on International Trade and State Sovereignty Shall (1): annually assess the legal and economic impacts of trade agreements on state and local laws, state sovereignty, and the business environment annually assess the legal and economic impacts of trade agreements on state and local laws, state sovereignty, and the business environment provide a forum for citizens and legislators provide a forum for citizens and legislators make recommendations to the general assembly, governor, and congressional delegation that are designed to protect the states job and business environment and state sovereignty from any negative impacts of trade agreements make recommendations to the general assembly, governor, and congressional delegation that are designed to protect the states job and business environment and state sovereignty from any negative impacts of trade agreements

24 24 work with interested groups from other states to resolve the conflicting goals and tensions between international trade and state sovereignty work with interested groups from other states to resolve the conflicting goals and tensions between international trade and state sovereignty on request from the governor or the general assembly, develop recommendations regarding challenges and opportunities posed by a particular agreement on request from the governor or the general assembly, develop recommendations regarding challenges and opportunities posed by a particular agreement submit an annual report submit an annual report The Commission on International Trade and State Sovereignty Shall (2):

25 25 The Commission on International Trade and State Sovereignty May: recommend legislation or preferred practices recommend legislation or preferred practices develop recommendations regarding challenges and opportunities posed by a particular agreement develop recommendations regarding challenges and opportunities posed by a particular agreement


Download ppt "Vermont Commission on International Trade and State Sovereignty Overview of International Trade and Its Impact on Vermonts Agricultural Sector Vermonts."

Similar presentations


Ads by Google