The events of the Free Trade Area of the Americas (FTAA) agreement onward the forest sectors and resources of member countries are investigated.

The events of the Free Trade Area of the Americas (FTAA) agreement onward the forest sectors and resources of member countries are investigated. A original of wood supply within the spatial partial-equilibrium Global Forest cropss Model is developed to link international trade and deforestation. The direct meanings of tariff changes and the indirect issues of income changes induced by way of trade liberalization are considered. The FTAA has a small positive impact in succession the region's forest resources. Higher harvests of industrial roundwood in most numerous countries are offset by increased afforestation befitting to the income effect of trade liberalization (captured by dint of the environmental Kuznets curve).

Key Words: trade liberalization, international trade, forest resources, forest sector trade model

Deforestation, particularly in the tropics, is of considerable importance with regards to the health of the global environment. The global forest area decreased between 1990 and 2000 according to 9.4 million hectares per year, the accrue of 14.6 million hectares by year of deforestation, and 52 million hectares through year of afforestation (Food and Agriculture Organization [FAO] 2001a). The cumulative pure loss during the 1990s was four times the area of Michigan. Environmental puzzles associated with deforestation include increased erosion, decreases in the global carbon sink, and los of biodiversity (Nordstrom and Vaughan 1999)

Concern about the part of freer trade in deforestation have been raised during negotiations of the independent Trade Area of the Americas (FTAA) agreement (American Lands Alliance 2001) Ratification and implementation of the agreement is put for December 31, 2005, with obligations likely to be phased in through a decade or more (Schott and Hufbauer 1999) For agricultural and forest results tariff and non-tariff barriers will be progressively reduc and agricultural export subsidies eliminated (Burfisher and Link 2000) The agreement will also reconcile now passing sub-regional trade pacts.

There are above 40 regional trade agreements (RTAs) already in force in the Americas, and more than a dozen in a less degree than negotiation (Stout and Ugaz-Pereda 1998 U International Trade Commission 1999 O'Keefe 2002) Significant existing RTAs are the Andean Community (Colombia, Ecuador, Bolivia, Peru Venezuela), the Caribbean Community (Antigua, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St Kitts-Nevis, St Lucia, St Vincent, Suriname), the Central American Integration rule (Costa Rica, Guatemala, Honduras, Nicaragua, El Salvador, Panama), the Southern public Market (MERCOSUR) (Brazil, Argentina, Uruguay, Paraguay), and the North American unrestrained Trade Agreement (Mexico, Canada, and the United States). The large number of RTAs in power in the Americas means that tariffs forward forest products in the Americas are relatively depressed (Table 1).

Diao, Somwaru, and Raney (1998) U Department of Agriculture (1998) Diao, Diaz-Bonilla, and Robinson (2003) and Mattson and Koo (2003) have investigated the potential impact of the FTAA forward member country agriculture sectors, and their economies in general. These studies recommend that the FTAA will benefit all member countries in times of increased incomes and trade. With the exception of Mattson and Koo (2003) these studies consider the benefits of technological spillovers and economies of scale from trade liberalization. The largest gains were predicted for developing countries, which are more likely to capture technological spillovers embodied in trade and capital streams from Canada and the United States (Diao, Somwaru, and Raney 1998) While there has been considerable work analyzing the potential impact of the FTAA forward the agriculture sector, the impact forward the forest industry and forest resources remains unknown.

Whether or not trade liberalization in subordination to the FTAA will increase or decrease forest resources hangs on the net impact of three conflicting environmental consequences of freer trade: composition, scale, and technique (Fredriksson 1998 Nordstrom and Vaughan 1999) The composition power is the change in the mix of consequences that countries produce. Production of near goods, such as industrial roundwood increases deforestation, while production of other dutifuls decreases it. This composition drift depends on each country's comparative advantage. The scale power is due to trade-liberalization-induced increases in income resulting in higher consumption, and associated increases in production. The scale tenor unambiguously increases deforestation. But citizens' increased incomes proceed in greater demand for the conservation and extension of forests, enforced end tighter environmental regulations. This is the technique meaning of trade liberalization. The snare impact of the composition, scale, and technique general intents on forest resources depends onward their relative strength; therefore, empirical analysis is necessary to determine their consequences in different countries.

Trade influences forest resources, and as well, forest resources influence trade. Trade-induced increases in forest supply may lead to over-exploitation and degradation of forests, resulting in long-run comparative disadvantage (Sedjo and Lyon 1983; Brander and Taylor 1997 1998) Forest sector originals provide a framework for determining the changes in trade and forest supply due to trade liberalization.