U.S. FARMERS SAY CAFTA A BAD DEAL

Source: Reuters
Printed: Wednesday, December 17, 2003
Written by: Doug Palmer

WASHINGTON, Dec 17 (Reuters) - U.S. sugar producers blasted a new U.S. free trade agreement reached on Wednesday with four Central American countries, saying it would open the door to an unacceptable volume of imports.

"The volume increases we are looking at are really more than our market can endure," Jack Roney, an economist at the American Sugar Alliance, told Reuters.

The sugar industry's opposition to the pact, combined with a similar stance from labor and textile groups, sets the stage for a tough battle in Congress next year.

Although the agreement leaves protective U.S. sugar tariffs in the place, it sets a precedent for other free trade agreements that could lead to about 1 million tons of additional sugar entering the U.S. market, Roney said.

That would put pressure on U.S. sugar prices and force domestic producers to cut their production by as much as 10 percent to 15 percent, he said.

A U.S. trade official, speaking on the condition that he not be identified, said the U.S.-Central American Free Trade Agreement, or CAFTA, would increase the duty-free import quota for El Salvador, Guatemala, Honduras and Nicaragua by about 85,000 to 90,000 metric tons in the first year of the pact and then grow 2 percent each year after that.

The four countries currently have a combined allocation of about 110,000 metric tons under the United State's global sugar quota, which totals 1.117 million metric tons. The United States hopes to add Costa Rica and the Dominican Republic, a major Caribbean sugar producer, to CAFTA before the agreement is sent to Congress in 2004.

Guatemala Economic Minister Patricia Ramirez, whose country is the largest sugar producer in Central America, said she was happy with the agreement, even though it fell short of the increased access farmers in her country were seeking.

"I think we all have a good deal," she told reporters.

Meanwhile, U.S. agriculture groups, from grain and dairy farmers to pork and beef producers, generally applauded the agreement, which would provide immediate duty-free access for more than half of American farm exports.

Tariffs on most remaining U.S. farm products would be phased out within 15 years.

A U.S. trade official, who asked not to be identified, noted the four Central American countries already are allowed to sell 99 percent of their farm goods in the United States duty-free under U.S. trade preferences.

"From a U.S. agriculture point of view, what we're really doing is leveling the playing field," the official said.

Under the deal, the U.S. beef industry would be able to immediately ship high-quality cuts of beef duty-free to those countries' sought-after hotel and restaurant markets.

U.S. food exports to the four countries now total $1 billion a year, of the nearly $60 billion worth of farm goods the United States ships globally.