Regional Trade Agreement: Effects of the Andean and Mercosur Pacts on the Venezuelan Soybean Trade and U.S. Exports

摘要

Since the mid-1990s, the two regional trade agreements in South America, the southernMercosur Pact (among Brazil, Argentina, Paraguay and Uruguay), and the northern Andean Pact (amongVenezuela, Colombia, Ecuador, Bolivia, and Peru) noticeably affected certain trade patterns between the twopacts members and with the United States for various reasons discussed herein. The effect of trade diversionowing to the Andean Pact with its common external tariff and price band system against non-Andean productswas examined for soybean and soybean meal imports into Venezuela historically an important market for U.S.products. As well, the recent combining of Mercosur and Andean nations into a single regional tradeagreement is likely to further adversely affect U.S. soy product sales to Venezuela. In 2003/04, the UnitedStates and Mercosur members of Brazil, Argentina, and Paraguay accounted for 94 percent of the $30 billionof world soybean and meal exports, but supplied little to Venezuela. A partial equilibrium, deterministic, andArmington-type model of the Venezuelan market for soybeans and meal was formulated by combining tariffsand the Andean price band variable levy into a single price wedge. Model results suggest that a combinedMercosur and Andean customs union under either a high or a low world soybean product price scenariowould noticeably benefit Mercosur suppliers at the expense of the United States as well as adversely affectdomestic Venezuelan producers (soybean processors) and fellow Andean member Bolivia.