June 5, 2004:
The United States and five Central American countries (Costa Rica,
El Salvador, Guatemala, Honduras and Nicaragua) signed an agreement
May 28 that National Farmers Union believes will adversely impact
domestic producers of sugar, fruit, vegetables, ethanol and other
commodities. Estimates of sizable trade gains for U.S. farmers and
ranchers are overly optimistic. The CAFTA countries have a combined
population of approximately 31 million people with limited resources
that can be used for the purchase of agricultural products. If the
Free Trade of the Americas agreement becomes reality or if CAFTA
nations establish similar agreements with other countries, these
limited market opportunities would become further reduced.
Additional market access and tariff relief for a few U.S. products
will not offset the negative impact of increased agricultural imports
from these CAFTA countries. The CAFTA would substantially open the
U.S. market to agriculture products that directly compete with U.S.
sugar, fruits, vegetables and ethanol. In 2003, the U.S. agricultural
trade deficit with the five CAFTA countries was more than $900 million.
As a whole, the administration’s trade agenda seems more inclined
to negotiate with countries that want increased access to U.S. markets
rather than with countries interested in buying more of our agricultural
products. If the administration opens our markets in every agreement
by even a small amount, eventually it adds up to a huge increase
in imports. This incremental approach has the potential to be just
as devastating as one big deal, especially when our agricultural
imports are already increasing at a faster rate than our exports.
The CAFTA resembles failed trade policies of the past that further
encourage a race to the bottom for producer prices and fails to
address major issues that distort fair trade. For example, it does
not address exchange rates, yet CAFTA nation currencies have continued
to decline against the U.S. dollar providing a trade advantage to
those nations. This would make their products less expensive in
Labor costs are a major component of U.S. agriculture. The CAFTA
does not implement enforceable requirements for participating nations
to achieve International Labor Organization standards with regard
to labor issues. It only provides that domestic labor laws be enforced,
which will continue to provide a competitive agricultural production
and processing advantage to those nations relative to the United
States in both bi-lateral and third-country trade.
Additionally, the CAFTA does not establish a timeframe or enforcement
procedures to harmonize environmental standards with U.S. levels.
Environmental compliance is a major element in U.S. agriculture
production and to forfeit these standards in trade deals makes no
sense to U.S. agricultural interests.
The CAFTA also does not adequately address tariffs. While some
tariffs will be eliminated immediately, the 15-year phase-out of
tariffs on other agricultural products will continue the market
access advantages the United States already provides these nations.
National Farmers Union supports trade that benefits agricultural
producers in both countries and cannot support agreements like the
CAFTA that trade away our agricultural markets for no visible returns
to American farmers and ranchers.
National Farmers Union (www.nfu.org)
works to protect and enhance the economic interests and quality
of life for rural citizens through legislative representation, educational
opportunities and support for farmer-owned cooperative ventures.
Contact NFU at email@example.com.