Looking South: Export Opportunities in the Americas
Mention hot regional markets of the 1990s and U.S. exporters of food and farm products are likely to think of East Asia and North America (Mexico and Canada)--two of the decades hottest. It is time to add the rest of the Americas to this list.
U.S. agricultural exports to South and Central America, including the Caribbean, have nearly doubled since 1990, reaching a record-high $4.9 billion in fiscal 1996. This trade performance places the southern half of the Americas among the worlds fastest growing regional markets for U.S. agricultural products.
Its a diverse region of more than 30 countries in various stages of economic development. The combined population, now close to 400 million, has caught up with that of North America (the U.S. included) and is growing at a faster rate.
Although average per capita incomes are low in the majority of these countries, income levels range widely and economic growth rates are relatively strong. The severe debt crisis that staggered Latin America during the 1980s has been largely overcome by a decade of economic reform, fiscal restraint and accelerating GDPs.
Recent reforms have emphasized market-oriented policies and private sector growth. At the same time, opportunities for broader participation in global trade have led most countries in the region to lower tariffs and reduce nontariff import barriers.
FTAA Aims for Hemispheric Free Trade
These changes, along with the spread of democratic governments throughout the hemisphere, have already contributed to greater economic integration, as well as increased trade and investment. The changes also paved the way for an ambitious proposal to strengthen North-South ties and further bolster regional economic and trade growth by creating a Free Trade Area of the Americas (FTAA).
The FTAA proposal was adopted at the December 1994 Summit of the Americas in Miami, where President Clinton hosted the first meeting of the hemispheres democratically elected heads of state. Although any agreement is several years away and faces many hurdles, the commitment to establish a free-trade area is receiving increasing political attention this year in a high-level effort to move from the planning stages toward formal negotiations.
As envisioned, the FTAA would eventually link all nations of the hemisphere in a tariff-free trade zone that stretches from the Canadian Yukon to Chiles Cape Horn. This would give U.S. products and services--including agricultural products--greatly improved access to the growing markets of South and Central America and the Caribbean.
At the 1994 Summit, participating nations set a target date of 2005 for completing the FTAA negotiations. Preliminary work is well underway to lay the foundation for formal negotiations to begin--possibly following the second Summit of the Americas scheduled for March 1998 in Santiago, Chile.
U.S. trade officials and technical experts have been participating in a number of regional working groups charged with developing issue agendas and procedural guidelines for the FTAA negotiations. Policy decisions on the goals, framework and substance of the planned talks are made in periodic meetings of trade ministers of the participating countries.
A Region of Growing Trade Prospects
As part of their efforts to liberalize their economies and expand trade, many countries in the southern Americas have already entered into trade agreements with their immediate neighbors or joined the larger regional trade groups. Some of the major trading arrangements include MERCOSUR (the Southern Cone Common Market), the Andean Pact, CACM (Central American Common Market), and CARICOM (Caribbean Community Common Market).
Other suppliers outside the region--including the European Union--also recognize the opportunities and are seeking closer trade ties with Latin American and Caribbean countries. One priority of U.S. trade officials eager to move ahead with the FTAA is to ensure that U.S. products receive preferential access to these markets and are not shut out by new agreements made without U.S. participation.
Trade data from the U.N. Food and Agriculture Organization indicate that the countries of the southern Americas imported nearly $25 billion worth of agricultural products from all suppliers in 1995, up by $10 billion from 1990.
With or without a hemispheric trade agreement, the regions demand for imported foods will continue to rise along with growing populations, expanding economies, higher incomes and further urbanization. An FTAA, however, is expected to spur this trade growth, while providing greatly improved access for U.S. products.
Today, analysts who track strong sales gains and identify promising future trade prospects are pointing not only to Asia and North America. They are also looking south to the other half of the Americas, where U.S. agricultural exports have been growing at a record pace.