UC Davis Agricultural and Resource Economics

Free Trade Agreements Now Abound In Our Hemisphere

by Roberta Cook and John Lamb

The world is changing and Latin America is part of the transition to a more market-oriented economy world-wide. Trade liberalization affords new opportunities to California horticultural exporters as: 1) consumer demand expands for the year-round availability of high quality fruits, vegetables and nuts; and 2) lower tariff and non-tariff trade barriers facilitate market access.

Given the recent profileration of these agreements, it is difficult to keep track of the changing rules of the game governing trade in the region. Consequently, a quick reference guide is provided below, indicating the year of formation, countries involved, and other pertinent information. The Foreign Agricultural Service (FAS) of the USDA is a good information source for exporters seeking additional information (202-720-6590).

Free Trade Agreements in South America

  • MERCOSUR (1991)
  • Includes Brazil, Argentina, Uruguay and Paraguay.
  • Combined GDP in 1992/3 was $661.9 billion.
  • Trade has quadrupled over past four years to nearly $10 billion.
  • ANDEAN PACT (1969)
  • Includes Venezuela, Columbia, Ecuador, Bolivia and Peru.
  • Combined GDP in 1992 was $128.9 billion.
  • Combined GDP in 1992 was $93.0 billion.

Free Trade Agreements in Central America

  • Central American Common Market (CACM)
  • Guatemala, El Salvador, Nicaragua and Costa Rica joined together in 1964; Honduras and Panama did not.
  • In early 1993 all 6 of these countries agreed to revive the CACM, liberalize trade, and establish common external tariffs.
  • CACM and Mexico have agreed to complete a free trade agreement in 1996.
  • Combined CACM GDP in 1992 was $32.0 billion.

Free Trade Pacts in the Caribbean

  • Caribbean Common Market (CARICOM) (1973)
  • Now includes Antigua-Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts-Nevis, St. Lucia, St. Vincent-Grenadines, Trinidad y Tobago.
  • Intraregional trade currently 12 percent of all exports.
  • Dominican Republic recently requested observer status in CARICOM.
  • Trade & Technical Cooperation Agreement with Cuba also proposed, likely to be signed.

Free Trade Agreements in North America

  • Includes the U.S., Canada and Mexico.
  • CARICOM and Chile, among others, have expressed hope of joining NAFTA.
  • Combined GDP in 1993 was $7.4 trillion.

Trade Preference Arrangements in the Americas

  • Caribbean Basin Initiative (CBI) (1983)
  • Joined together the U.S. and 24 Caribbean and Central American countries.
  • Canada-Caribbean Commonwealth Program (CARIBCAN) (1985)
  • Canadian equivalent of the CBI.
  • Venezuela-CARICOM
  • Joined together Venezuela and 13 countries in the Caribbean.
  • Andean Trade Preference Act (1991)
  • Gives Colombia, Ecuador, Peru and Bolivia preferential access to the U.S.
  • Not yet implemented for Ecuador and Peru.

Second-Tier Free Trade Agreements in the Americas

  • G3 (1991): Mexico, Colombia and Venezuela
  • Mexico-Chile (1991)
  • Venezuela-El Salvador (1991)
  • Colombia-Venezuela (1991)
  • Chile-Colombia (1990)
  • Mexico-Costa Rica (1994)
  • Chile-Costa Rica
  • Mexico-CACM (1991)
  • Latin American Integration Association (ALADI) (1984)
  • Includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.

Additional Trade Agreements Now Under Discussion

  • Association of Caribbean States (ACS) may unite CARICOM, CACM, Venezuela, Colombia, Mexico, the Dominican Republic and Cuba.
  • Combined GDP is $500 billion, making it the fourth largest trading block in the world.
  • Mexico with 5 Central American Countries (by 1996)
  • The G-3 with 6 Central American Countries
  • Mexico with New Zealand (1994 agreement to examine obstacles to trade and investment).
  • U.S. and Chile may negotiate a free-trade pact under 'fast-track' rules by legislation recently introduced in U.S. Congress.

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