CAFTA squeezes through after sugar concession

Related tags North american free trade agreement International trade United states

The Central America Free Trade Agreement narrowly passed its first
Congressional test yesterday, but only after concessions were made
to the sugar industry writes Anthony Fletcher.

Committee members endorsed CAFTA in a non-binding vote of 11 to 9, but assurances had to be made that the agriculture secretary would discuss ways of mitigating the losses expected under the new trade regime.

The fact that the influential Senate Finance Committee could only approve the bill after some last-minute wrangling underlines both the contentiousness of CAFTA and the power of the sugar lobby.

The industry is fearful that the pact, which would eliminate most tariffs between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, will open the American market to increased sugar imports without any reciprocal benefit.

"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 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.

CAFTA also faces strong opposition from both Democrats and Republicans who want a moratorium on such agreements until the administration investigates the country's $600 billion trade deficit.

Senator Olympia J. Snowe of Maine, one of two Republicans to vote against the measure, said the United States had yet to see "the upside of these trade agreements."

"The reluctance now and resistance is because of our experience with NAFTA (North American Free Trade Association),"​ she told the New York Times."It's breathtaking the number of jobs we've lost yet nothing has come of the promises to get trade right."

But despite such fierce confrontation, only one amendment to the bill was actually passed, and even this will not form part of the CAFTA accord, at the suggestion of Senator Charles E. Grassley, the chairman of the committee. As a result, supporters of the bill are breathing a sigh of relief - had it not been past it is probable that it would never have been taken up by the House - and expressing a fair degree of triumph.

"The Senate Finance Committee's mock mark-up today of the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) shows how well this agreement was negotiated to secure the best possible deal,"​ said Bob Stallman, American Farm Bureau Federation president.

"The fact that no amendments were adopted bodes well for passage of this trade agreement that is so important to America's agricultural producers."

The US food industry, for the most part, has long voiced its support of the agreement, arguing that it would increase the country's export potential. "Since it is comprehensive, it will allow us to import key raw materials at more competitive prices,"​ said GMA president Manly Molpus at a recent Congressional hearing.

"We simply cannot allow any products or sectors, including sugar, to be excluded from trade agreements. One exclusion leads to another and soon our agreements are gutted."

The Bush administration signed CAFTA with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua last year and is hoping to secure the bill's passage this summer. Republican senators concerned about the sugar provisions will now meet with White House officials next week.

"The fact is, passage of CAFTA is good for both our geopolitical and economic interests,"​ argued Senator Grassley yesterday. "We have very little to lose and much to gain from its passage. In contrast, we have much to lose and little to gain by its defeat."

Related topics Commodities Cocoa

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