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.
Varying Degrees of Competition
One way to look at implications for the United States is to consider how the agreements could affect current U.S. exports to the countries signing the agreements. Virtually all U.S. exports to ASEAN countries now face some competition from China, Australia, and New Zealand. Similarly, most U.S. exports to Australia and New Zealand (Oceania) confront competition from ASEAN. However, only a subset of U.S. exports to China faces competition from ASEAN, mitigating the likely adverse impact of the ASEAN-China FTA on U.S. agricultural exports.
The new FTAs are projected to have only modest adverse impacts on U.S. exports because tariffs in this region are already low. The United States has a bilateral trade agreement with Australia, for example, which eliminated tariffs on U.S. products. With the new ASEAN agreement, however, U.S. exporters will lose their special advantage, as Southeast Asian products also gain duty-free access. However, Australia’s tariffs on agricultural products are typically low. Indonesia’s tariffs on products that the U.S. currently exports are mostly zero, and few exceed 5 percent.
In the Australia and Indonesia markets, the new ASEAN FTAs will have small effects on tariffs. Most of the other countries also impose low tariffs—zero or under 5 percent—on most products traded with the U.S. Only Thailand imposes duties over 5 percent on a significant portion of the products where U.S. exports are competitive.
U.S. agricultural exports to seven of these countries (four major ASEAN countries, China, Australia, and New Zealand) averaged $15 billion during 2005-09. Of that, $7 billion did not compete with the new FTA partners and another $2.6 billion entered duty free, leaving just over $5 billion of dutiable exports. U.S. exports in this $5 billion group are potentially at risk from the ASEAN FTAs.