Agriculture groups beef up last minute lobbying for CAFTA
U.S. agricultural trade associations have stepped up their efforts this week on Capitol Hill to win congressional support for the passage of the Central American Free Trade Agreement (CAFTA).
Congress is expected to begin the process of committee consideration for legislation to implement the free trade agreement next week. The agreement includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
Many agricultural trade associations say CAFTA will go a long way to open the region to U.S. exports of farm goods. CAFTA will eliminate tariffs on U.S. agricultural goods that range from 15 to 43 percent, while the Caribbean Basin Initiative allows 99 percent of agricultural commodities from Central American countries to enter the United States duty free. Studies indicate U.S. exports could reach $1.5 billion once CAFTA is fully implemented.
“Removing trade barriers between the U.S. and the CAFTA-DR countries will preserve and create export opportunities not only for U.S. soybean, pork and poultry producers, but all of U.S. agriculture,” said Neal Bredehoeft, president of the American Soybean Association.
For example, CAFTA provides the United States with sizeable quotas for exporting pork duty free. These quotas will increase each year until they’re eliminated in year 15. In addition, significant sanitary and technical issues are being worked out.
“CAFTA-DR countries are already a large and loyal market for U.S. soybean exports,” Bredehoeft added. “This agreement will solidify our position as the preferred supplier of soybeans and soybean products to these Central American countries, and open new opportunities for exports of U.S. livestock.”
CAFTA will immediately eliminate tariffs on all U.S. soybeans and soybean products, with the exception of refined soybean oil, which the tariffs will be phased out over 15 years in equal annual cuts.
However, U.S. sugar interests have vigorously attacked CAFTA, stating it would destroy their business.
“As a part of the agreement, the United States will allow CAFTA-DR countries to import an additional 164,000 short tons of sugar above their current sugar quota,” testified American Farm Bureau Federation President Bob Stallman before the Senate Agriculture Committee Tuesday. “This additional sugar will have a minimal impact on the industry as demonstrated in our economic analysis.”
The American Farm Bureau expects the sugar industry to experience about an $80.5 million impact on an approximate $2.1 billion domestic industry.
“Any sugar that the CAFTA-DR countries would export to the United States above their new sugar quotas would still be subject to a high tariff,” Stallman said.
There are also concerns about the CAFTA countries’ labor standards. A recent International Labor Organization study found the countries in the agreement have sufficient labor laws on the books but still lacked adequate enforcement.
U.S. Trade Representative Rob Portman said the Central American countries are obligated to enforce their labor laws under CAFTA.
“If the problem is lack of political will, CAFTA-DR has real teeth in the form of tough and practical enforcement provisions,” Portman told the Hispanic Alliance for Free Trade on Thursday. “If a country fails to enforce its labor laws, CAFTA-DR provides for heavy fines, up to $15 million per year, per occurrence.”
Stallman warned: “If this agreement fails (to pass Congress), it will be to the disadvantage of America’s farmers and ranchers.”
The American Soybean Association is concerned about whether the current level of support in Congress is enough to guarantee CAFTA’s passage, and has encouraged all American farmers and livestock producers to immediately contact their senators and representatives on Capitol Hill to support the free trade measure.