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 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.
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