Eric WailesUniversity of Arkansas, Division of Agriculture

Dept of Agr. Econ. & Agribus.for

SAEA Annual Meeting, Mobile, ALFebruary 5, 2007

Impacts of Trade SanctionsImpacts of Trade SanctionsCase of U.S. RiceCase of U.S. Rice

U.S. Rice Trade and Sanctions

Approximately 40%-50% of U.S. rice is exportedImpact of Sanctions on Cuba, Iran, and IraqImmediate and long term effectsImpacts on ImportersImpacts on United States

Export Share of U.S. Rice

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

Share of total U.S. rice exports to Cuba, Iran and Iraq

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1956

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

Total U.S. Rice Exports and Share to Cuba, Iran, and Iraq

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1956

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

'00

0 M

T

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Sanctions on CubaPre-1960, #1 export market for the U.S.

30% share of U.S. exports~100% of Cuban imports

U.S. trade resumed in 2000 but remains subject to payment restrictionsNow:A 700 thousand metric ton market:Commercial value of market = $280 M

~20% of Cuban imports (Vietnam, Thai)~5% share of U.S. long grain exports

Sanctions on Iran1970s, #1 export market for the U.S.

24% share of U.S. exports75 - 100% of Iran’s imports

U.S. trade resumed in early 1990s capturing ~20% share of Iran’s market but closed since 1994Now:A 900 thousand metric ton market:Commercial value of market = $360 M

U.S.: ~0% of Iran’s imports (Vietnam, Thai, Pakistan)

Sanctions on Iraq1980s, #1 export market for the U.S.

25% share of U.S. exports90 - 100% of Iraq’s imports

U.S. trade resumed in early 2004 capturing ~25% share of Iraq’s marketNow:A 1.2 million metric ton market:Commercial value of market = $480 M

U.S.: ~25% of Iran’s imports (Vietnam, Thai, Pakistan, India)

ConclusionsSanctions have hit sequentially #1 U.S. rice markets – Cuba, Iran and then Iraq3 markets now:

2.8 million metric tons $ 1.1 billion in sales

Equal to total U.S. long grain exportsCuba + Iraq account for 15% of U.S. exports

Summary – world without sanctionsU.S. would be competitive to capture Cuban market:

additional 450 thousand MT, $180 millionImpact on Cuba – higher quality rice

Not likely to gain more of Iraq marketCould gain up to 30% or Iran’s market

Additional 300 thousand MT, $120 millionCost to US rice sector from sanctions:

$400 million: under utilized production & millingEffect of sanctions: high costs on U.S. rice sector and small costs on importers