What is in this article?:
- Empirical evidence shows Free Trade Agreements (FTAs) increased trade among member countries, suggesting that the large number of FTAs that do not include the United States may be eroding the U.S. presence in foreign markets.
Most U.S. Trade Not Affected
The Association of Southeast Asian Nations recently implemented a trade agreement with China and another with Australia and New Zealand. These agreements are illustrative of the potential effects on U.S. agriculture of FTAs from agreements that exclude the United States. The ASEAN countries, as well as China, Australia, and New Zealand, are important destinations for U.S. agricultural exports. These countries are both customers and competitors for U.S. agriculture (see box, “Structure of U.S. Agricultural Trade With ASEAN FTA Partners and Colombia”).
The ASEAN-China free trade area took full effect on January 1, 2010. The agreement removes tariffs on about 90 percent of goods traded between China and the six founding members of ASEAN (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand). Cambodia, Laos, Burma, and Vietnam are scheduled to remove tariffs by 2015. Tariffs for “sensitive products,” such as poultry in the Philippines, pork in Thailand, and tobacco in China and Indonesia, are to be phased out by 2018. Tariffs on “highly sensitive products,” including rice in almost all of the ASEAN countries plus China, and corn in China, Indonesia, the Philippines, and Thailand, are not exempt from tariff cuts but will only be reduced, not phased out.
Australia and New Zealand began jointly negotiating a free trade agreement (AANZFTA) with the ASEAN countries in 2004. The agreement was signed in 2009 and became effective in April 2010. Australia and New Zealand will benefit from the eventual elimination of tariffs on 99 percent of their exports to the ASEAN countries. A proportion of tariffs will be eliminated immediately, and most of the remaining tariffs will reach zero at various stages between 2011 and 2020. A few tariffs will not reach zero until 2025. About 5 percent of the ASEAN countries’ tariffs will not be cut to zero, including those for rice in Indonesia, Malaysia, the Philippines, and Thailand, and alcoholic beverages in Indonesia, Malaysia, and Vietnam.