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Do we hafta have CAFTA?

By Dave Frederickson, National Farmers Union President

(Saturday, June 5, 2004 -- CropChoice guest commentary) -- 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 administrationís 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 international markets.

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 nfunews@nfu.org.