Stallman challenges sugar industry over CAFTA

Related tags International trade Spanish language United states

American Farm Bureau Federation president Bob Stallman agues that
the sugar industry is wrong to oppose the ratification of the
Central American Free Trade Agreement, writes Anthony

He told the Senate Agricultural Committee yesterday that failure to pass the bill would be to the disadvantage of the US food industry.

"As a part of the agreement, the United States will allow CAFTA-DR (Central American Free Trade Agreement) countries to import an additional 164,000 short tons of sugar above their current sugar quota,"​he said.

"This additional sugar will have a minimal impact on the industry as demonstrated in our economic analysis."

AFBF​ expects the sugar industry to experience about an $80.5 million impact to an approximate $2.1 billion domestic industry. "I think the sugar industry is the only commodity group against CAFTA, because they are likely to only get a small increase in market access,"​ Stallman told​ last week.

If passed, CAFTA would eliminate most tariffs between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

The US sugar industry however remains resolutely opposed.

"It will lead to sugar imports greatly in excess of US needs, make the no-cost US sugar policy inoperable, and ultimately lead to the destruction of the US sugar industry,"​ said the Southern Minnesota Beet Sugar Cooperative​ (SMBSC) in a press release.

"The proposed CAFTA would more than double CAFTA countries' duty-free access to the US sugar market over 15 years."

The SMBSC maintains that increased imports of only a few hundred thousand tons would cancel the marketing allotment system that Congress requires USDA to use to operate US sugar policy at no cost to taxpayers, cause forfeitures of sugar loans to the government, allow existing surplus sugar onto the market and destroy the US sugar policy and price.

It argues that studies by Louisiana State University and North Dakota State University predict that excess imports of 1 million tons would drive the US price down by 30 to 40 percent, and that few American sugar producers would survive.

"At risk are 146,000 sugar-producing and related jobs, nationwide, and nearly $10 billion in annual economic activity,"​ said the cooperative.

But Stallman argues that there are protections in place in the agreement for the US sugar industry. "Any sugar that the CAFTA-DR countries would export to the United States above their new sugar quotas would still be subject to a high tariff,"​he added.

And despite the sugar industry's opposition, Stallman insists that the United States will remain at a disadvantage in the competitive market unless CAFTA-DR is passed. He argues that US food exports will continue to face applied tariffs of between 15 and 43 percent.

"CAFTA-DR will eliminate these barriers. This agreement provides balance by giving US agriculture the same duty-free access that CAFTA-DR nations already have to our markets."

Trade preferences provided under the Caribbean Basin Initiative (CBI) allow 99 percent of agricultural products from the Central American countries and the Dominican Republic to enter the United States duty free. AFBF analysis predicts that US agriculture would see increased agricultural exports in the amount of $1.5 billion by the end of full implementation.

Overall, says Stallman, the agreement places the United States in a very strong position to capitalize on major commodities.

"In looking at the variety of US commodities that would benefit because of increased trade due to a Central America-Dominican Republic Free Trade Agreement, one can only conclude that a 'Yes' vote on CAFTA-DR is a vote for agriculture and agricultural exports,"​ he said.

The Bush administration signed CAFTA with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua last year. The AFBF is urging Congress to pass the measure, while opponents, including the sugar industry and the national Union of Farmers (NFU), continue to oppose its implementation.

Related topics Commodities Cocoa & Sugar

Related news