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The Trade Effects of MERCOSUR and The Andean Community on U.S. Cotton Exports to CBI countries

  • Yeboah, Osei-Agyeman
  • Shaik, Saleem
  • Batson, Seon
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    The United States engagement in nonreciprocal preferential trade arrangements has been proliferating with several developing countries throughout the past couple of decades. One of the oldest and more successful of these arrangements has been the Caribbean Basin Initiative (CBI).The CBI is a general term used to refer to the Caribbean Basin Economic Recovery Act of 1983 (CBERA), the Caribbean Basin Economic Recovery Expansion Act of 1990 (CBERA Expansion Act), and the Caribbean Basin Trade Partnership of 2000 (CBTPA) (Ozden and Sharma 2006). The central premise behind the plan was that, by encouraging the CBI countries to become more open and liberal, trade would expand – and eventually translate into economic development and growth (Deere, 1990). The partnership between the U.S. and the CBI provides duty and quota free treatment for 1) textile and apparel products assembled from U.S. fabric in CBI beneficiary countries from U.S. fabric and 2) yarn and apparel assembled from CBI regional fabric, subject to a quantitative limit which increases over time. Cotton is a major commodity for the U.S. generating about $4-5 billion in annual cash receipts (Dodson 1995). Furthermore, cotton is a major raw material for the textile and apparel industries creating heavy dependence by these industries on cotton production. The demand for raw fiber is derived from consumer demand for textile products where cotton is an important textile fiber (Marseli and Epperson, 2002). This paper analyzes the effects these regional trade agreements have on CBI countries cotton imports from US by calculating the associated trade creation and trade diversion values.

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    File URL: http://purl.umn.edu/46028
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    Paper provided by Southern Agricultural Economics Association in its series 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia with number 46028.

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    Date of creation: 2009
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    Handle: RePEc:ags:saeana:46028
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    1. Skripnitchenko, Anatoliy & Abbott, Philip C., 2003. "Preferential Trade Arrangements In Apparel Exports From The Caribbean To The U.S.: A Dynamic Investment Approach," 2003 Annual meeting, July 27-30, Montreal, Canada 21977, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Srivastava, Rajendra K & Green, Robert T, 1986. "Determinants of Bilateral Trade Flows," The Journal of Business, University of Chicago Press, vol. 59(4), pages 623-40, October.
    3. Vado, Ligia & Willis, David B. & Mohanty, Samarendu, 2004. "Cotton Supply Response In Brazil: Traditional Vs. Expansion Region," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34712, Southern Agricultural Economics Association.
    4. Hilbun, Brian M. & Kennedy, P. Lynn & Dufour, Elizabeth Anne, 2006. "A Determination of the Trade Creation and Diversion Effects of Regional Trade Agreements in the Western Hemisphere," 2006 Annual meeting, July 23-26, Long Beach, CA 21138, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Yeboah, Osei-Agyeman & Shaik, Saleem & Allen, Albert J. & Ofori-Boadu, Victor, 2007. "Trade Effects of the Central American Free Trade Agreement," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9815, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Loper, Nathan & Abbott, Philip C. & Foster, Kenneth A., 2003. "Preferential Trade Of Agricultural Commodities In The Caribbean Basin," 2003 Annual meeting, July 27-30, Montreal, Canada 22018, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
    8. Marseli, Oussama & Epperson, James E., 2002. "An Analysis Of Domestic And Export Demand For U.S. Cotton," Faculty Series 16709, University of Georgia, Department of Agricultural and Applied Economics.
    9. Koo, Won W. & Karemera, David, 1992. "Trade Creation and Diversion Effects of the U.S.-Canadian Free Trade Agreement," Agricultural Economics Reports 23345, North Dakota State University, Department of Agribusiness and Applied Economics.
    10. Dean, Judith M., 2002. "Do Preferential Trade Agreements Promote Growth? An Evaluation of the Caribbean Basin Economic Recovery Act," Working Papers 15867, United States International Trade Commission, Office of Economics.
    11. �aglar Özden & Gunjan Sharma, 2006. "Price Effects of Preferential Market Access: Caribbean Basin Initiative and the Apparel Sector," World Bank Economic Review, World Bank Group, vol. 20(2), pages 241-259.
    12. Bajpai, Siddharth & Mohanty, Samarendu, 2008. "Impacts of Exchange Rate Volatility on the U.S. Cotton Exports," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6849, Southern Agricultural Economics Association.
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