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.