Preferential trade of agricultural commodities in the Caribbean Basin

Nathan A Loper, Purdue University

Abstract

An investigation into the performance of CBERA and GSP programs for agricultural commodities from CBI countries found that most of the growth in exports of preferenced goods is due to six commodities—live tree slips or cuttings, dasheens, fresh or dried pineapples, cantaloupes, frozen orange juice and ethyl alcohol. U.S. import policies restricted the exports of meat and sugar while import demand reductions of high valued cigars account for most of the declining trend in exports. It was hypothesized that goods that lost import market share and experienced diminished export values were homogenous and therefore their exports were crowded out due to preference erosion from URAA commitments and from the enactment of NAFTA. Conversely, the export of goods that maintained or increased market share and gained in export value were hypothesized to be differentiated and satisfied a niche market. Market share elasticities and own and cross-price elasticities of excess demand were estimated to examine likeness of product across country/region of origin. It was found that dasheens were complementary in nature and bulk pineapples, frozen orange juice, limes and oranges were all differentiated by country/region of origin with limes and oranges being less differentiated than the other two. Bulk pineapples and frozen orange juice were found to be highly differentiated most likely because of vertically integrated market structures in both the CBI and other world markets that increase the feasibility of proprietary genetics and promotion. It was found through further simulations that eroding preferences had very little effect on import demand price changes. Therefore, even though limes and oranges observed market share losses, these reductions were not caused by preference erosion. Increased participation in regional trade agreements and multilaterism did not manifest decreased exports from the Caribbean Basin to the United States. Future trade agreements most likely will not benefit any exporting country unless exported goods are differentiated by some sort of quality difference or brand recognition that may be associated with the targeted trade recipient's country of origin.

Degree

Ph.D.

Advisors

Foster, Purdue University.

Subject Area

Agricultural economics

COinS