fb - voice of agriculture
May 2005

A Vote for CAFTA-DR is a Vote for Agriculture


Bob Stallman
President
American Farm Bureau
By Bob Stallman
President, American Farm Bureau

The agriculture community has geared up for one of the most important trade issues facing the industry this decade. The Central American-Dominican Republic Free Trade Agreement, also known as CAFTA-DR, not only affects the way we trade in the world marketplace, but the outcome of the legislation will have significant impacts on U.S. agriculture.

CAFTA-DR has been signed by the governments of the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The next step is for the administration to send the agreement to Capitol Hill for a vote. As I see it, a vote for CAFTA-DR is a vote for U.S. agriculture.

It’s Time for CAFTA-DR

Most of American agriculture agrees – It’s time for CAFTA-DR. The agreement is expected to result in nearly $1.5 billion in agricultural exports after full implementation. Because tariffs on practically all U.S. products entering CAFTA-DR nations will fall to zero percent after implementation, the agreement provides balance and positions U.S. agriculture to better compete in this market.

U.S. agriculture is, in essence, already living under this agreement because of the existing Caribbean Basin Initiative (CBI), which was implemented in the early 1980s. Under the CBI, 99 percent of agriculture imports from CAFTA-DR nations already are entering the United States duty-free. CAFTA-DR will level the playing field by providing duty-free access for U.S. products exported to these countries.

CAFTA-DR also will give U.S. agriculture exports a competitive advantage over other nations because trade barriers the United States has faced will be eliminated, allowing what will eventually be free entry of U.S. products -- entry that will not be afforded to other countries like the European Union, Canada and Brazil.

The Truth About Sugar

Some skeptics of the CAFTA-DR argue the agreement will kill the U.S. sugar industry by bringing in foreign sugar. That will not happen! The additional access to the U.S. market for sugar producers in the region amounts to only one and a half teaspoons per week for every American. That translates to about 1.5 percent of domestic U.S. sugar production.

Increased sugar imports from the CAFTA-DR nations would amount to less than one-quarter of 1 percent of total trade with the region. In all, the U.S. sugar industry will experience approximately an $80.5 million negative impact on an approximate $2.1 billion domestic industry. Overall, CAFTA-DR will provide a net $1.35 billion positive impact to the rest of American agriculture. The numbers are not even close!

Even with that minimal impact to the sugar industry, there are safeguards in place. The agreement includes a provision allowing the U.S. government to shut off imports of CAFTA-DR sugar if it harms the U.S. sugar industry. Further, the U.S. will continue to apply tariffs on all CAFTA-DR sugar imports exceeding quota amounts.

U.S. agriculture will significantly benefit from CAFTA-DR. A vote for CAFTA-DR would be a vote for our nation’s farmers and ranchers. A vote for CAFTA-DR would be a vote for the whole of U.S. agriculture.