_<u>Table 8: Effects of the CAFTA agreement on Nicaragua’s economic sectors</u>_

|||<br><br>**Im**|<br>**ports a**|<br><br>**nd Lo**|<br>**cal Sale**|<br> <br>**s**|**Exports**<br>|**and p**<br>|**roduct**|**ion**|
|---|---|---|---|---|---|---|---|---|---|---|
|||**tmUS**|Δ**M**|**M/D**|Δ**S**|Δ**Pd**|ΔΕ**x**|**Ex/Xp**|Δ**Xp**|Δ**Px**|
||**Coffee**|8|3|8|1|-0.6|3|101|3|-0.1|
|**re**|**Sugar Cane**|55|0|0|0|-1.3|0|0|0|-1.3|
|**ltu**|**Basic Grain**|29|54|11|-4|-4.8|17|3|-3|-4.6|
|**cu**|**Other Agri. Products**|8|2|14|1|-0.5|10|26|3|0.1|
|**gri**|**Livestock**|4|5|4|1|-0.2|2|8|2|-0.2|
|**A**|**Forestry**|1|-3|1|1|-2.2|10|2|1|-2.2|
||**Fishery**|10|29|4|2|4.4|-15|6|1|4.2|
|**ng**<br>|**Mining**|2|0|85|-1|0.2|-2|55|-1|0.1|
|**ini**<br>**Ene**|**Electricity Gas Water**|10|1|2|0|0.3|-1|0|0|0.3|
|**M**<br>|**Water Distribution**|0|0|0|0|0.5|0|0|0|0.5|
|**ng**|**Meat and Fish Products**|18|13|4|0|0.4|8|53|4|1.4|
|**essi**|**Sugar Producs**|8|2|1|0|-0.1|1|33|0|0.0|
|**oc**|**Dairy**|12|11|18|-1|-0.3|0|22|-1|-0.3|
|**Pr**|**Other Food**|7|1|35|2|-1.9|11|7|3|-1.8|
|**od**|**Beverages**|12|4|8|0|0.0|0|3|0|0.0|
|**Fo**|**Tobacco**|4|0|85|-4|1.5|3|96|2|3.2|
|**ng**|**Textiles Clothing & Leather**|4|4|38|-1|-0.1|2|55|0|0.2|
|**uri**|**Wood Products**|8|4|23|-1|-0.6|1|12|-1|-0.5|
|**ct**|**Paper Print Products**|3|1|55|-1|0.1|-2|3|-1|0.1|
|**ufa**|<br>**Refined Oil**|7|2|26|-1|0.0|0|8|-1|0.0|
|**an**|**Chemicals**|3|1|71|-1|-0.2|0|18|0|-0.2|
|**r M**|**Glass No-Metal Products**|4|1|35|-1|0.2|-1|7|-1|0.2|
|**the**|**Metal Products**|3|0|72|-1|-0.1|0|16|-1|-0.1|
|**O**|**Machinery and Equipment**|2|0|83|-2|-0.2|-1|73|-1|-0.1|
|**s**|**Construction**|0|0|0|0|0.3|0|0|0|0.3|
|**ice**|**Commerce**|0|0|0|0|0.7|0|0|0|0.7|
|**erv**|**Other Services**|0|1|5|0|0.4|-2|2|0|0.4|
|**S**|**Transport Services**|0|0|6|0|0.2|-1|9|0|0.1|
||**Total**|4|2|23|0|00|4|12|0|01|
|||**_-_**|**_-- Agg_**|**_regate_**|**_sectors_**|.<br>**_average _**|**_s ---_**|||.|
||**Agriculture**|21|22|7|0.1|-0.9|5|23|1.0|-0.7|
||**Food Processing**|8|3|21|0.5|-0.4|6|28|1.9|0.0|
||<br>**Mining and Energy**|2|0|48|-0.2|0.3|-2|12|-0.4|0.3|
||**Other Manufacturing**|3|1|57|-0.8|-0.1|1|21|-0.5|0.0|
||**Services**|0|1|3|-0.1|0.4|-1|2|-0.1|0.4|

Notes: **tm** represents initial tariff rates, Δ **M** the percent variation in total import volumes with respect to the initial levels, **M/D** the ratio of imports to domestic demand (the sectoral import dependency, calculated using pre-liberalization levels), Δ **S** the percent variation in the volumes of domestic sales of domestic output, Δ **Pd** the percent variation in domestic prices for local sales, Δ **Ex** the percent variation in the volumes of exports, **Ex/Xp** the ratio of exports to domestic output (the sectoral export orientation), Δ **Xp** the percent change of domestic output, and Δ **Px** the percent change of output prices.

Nicaragua’s liberalization of U.S. imports affects just one-quarter of total imports (as shown Table 3) and, thus, has a smaller aggregate impact than full unilateral trade liberalization. However, the overall structural adjustment and inter-sectoral resource reallocations are quite significant due to the large U.S. weight in some critical sectors – such as the 72% of _Basic Grains_ imports and the 26% of exports for the two largest exporting sectors in Nicaragua, _Coffee_ and _Meat and Fish Products_ . The CAFTA agreement obviously includes increased market access for Nicaraguan products in the U.S. market. As shown more clearly in the next section, however, this reciprocal liberalization amounts to a positive but rather small shock. In the model, the implied 28