Impacts of the Western Hemisphere Free Trade Agreement on international trade of soybean oil, soybean meal, and soybeans

A major multi-country free trade agreement currently under negotiation is the Free Trade Area of the Americas (FTAA). The agreement is proposed to be operational by January 2005 and would encompass 34 countries in the Western Hemisphere.; Soybeans and soybean products are important export commodities in the Western Hemisphere. It is expected that tariffs and duties on these commodities will be intensely negotiated in the FTAA tariff negotiations phase, scheduled to commence in May 2002.; The purpose of this research is to analyze the effects of FTAA implementation on international trade of soybean oil, soybean meal and soybeans. Emphases of investigations are on how the implementation of FTAA is affected by Brazil's soybean output expansion and China's accession into the World Trade Organization. The method of analysis is using spatial equilibrium model that includes all countries in the Western Hemisphere and several regions outside the hemisphere.; Summary of the results are as follows. If liberalization were only within the FTAA, Brazil would benefit with higher soybean oil and soybean meal exports, and expansion of its crushing sector. The U.S. would only be able to increase its soybean oil export. However, if the implementation of the FTAA were combined with China's trade liberalization, the U.S. would achieve higher exports in all three commodities. Brazil would still gain with larger exports of soybean oil and soybean meal. In addition, its processing sector would still expand.; If liberalization is only within the FTAA and Brazil expands soybean output, the U.S. would only be able to increase its soybean oil exports. Brazil would be able to achieve higher soybean oil and soybean exports, and slight expansion in the processing sector. However, in the more likely future scenario where the implementation of the FTAA is combined with China's liberalization and Brazil expanding soybean output, the U.S. would be able to greatly expand its soybean oil and soybean meal exports, with much of these increases in exports going to China. Additionally, the U.S. would also be able to expand its soybean-processing sector. Brazil, on the other hand, would have higher soybean oil and soybean exports only.