Free trade agreement may have tough time in Congress
Free trade agreement may have tough time in Congress
The Central American Free Trade Agreement, which is largely supported by the U.S. fresh fruit and vegetable industry, may have a tough time in Congress when it begins ratification hearings in April.
Ken Gilliland, director of international trade for Irvine, CA-based Western Growers Association, said that WGA has publicly supported CAFTA "as there is no downside for our members."
Mr. Gilliland explained that because of the Caribbean Basin Initiative of the 1980s, the countries involved in CAFTA " Guatemala, El Salvador, Nicaragua, Honduras, Costa Rica and the Dominican Republic " already enjoy duty-free shipping into the United States for most of their products.
There are some exceptions, notably sugar, but most products come into the United States with no tariff. In contrast, most U.S. fruits and vegetables headed for the CAFTA countries have a duty of 15 percent.
?Looking through the tariff schedule, some duties are a bit higher and some are a bit lower, but 15 percent appears to be the most common," he said.
Mr. Gilliland said that CAFTA will result in immediate elimination of some duties, while others will be phased out over five, 10 or 15 years. "The balance of trade for fruits and vegetables is already in their favor, so we think we have nothing to lose with this agreement."
The USDA trade statistics with Central America bolster Mr. Gilliland?s argument. In 2004, the United States exported $1.5 million worth of vegetables to the Central American region, but imported $43 million worth of vegetables. In fruits, the disparity is even greater. In 2004, Central America bought $33.8 million in U.S. fruits but sent more than $1 billion in fruit exports to the United States.
To be fair, the vast majority of those Central American fruit exports were bananas or pineapples " two crops that do not have mainland U.S. competition. But there are also significant numbers of other fruits, such as melons and papayas. As a market for U.S. fruit, grapes and apples lead the list.
?It's a nice little market for a few U.S. commodities, and with a reduction in duties, it will probably get even better," said Mr. Gilliland.
A U.S. agricultural trade expert who often lobbies Congress in the trade arena for various clients who asked for anonymity said that CAFTA is under the radar screen for most of U.S. agriculture. "The U.S. sugar lobby is going to fight it, but I don?t know of anyone else [in the ag community] lining up against it."
Dozens of trade associations representing sugar beet growers and other sugar industry components have repeatedly and publicly expressed their opposition to CAFTA. Sugar from CAFTA countries, primarily Dominican Republic and Costa Rica, has not been allowed into the United States duty free.
The anonymous trade expert said that the sugar industry lobbyists claim they were assured that sugar would be exempted from CAFTA, but it was not. The sugar lobby claims that CAFTA will result in a flooding of the U.S. market with imports and a virtual end to the U.S. sugar industry, which has experienced rough times in recent years.
There is also much opposition from labor and social activist groups around the United States and in Central America. Though Guatemala has ratified the free trade agreement, there have been public demonstrations against the pact. In fact, one such protest resulted in a death and many arrests.
On Monday, March 21, a story on National Public Radio in the United States predicted that the pact would not be ratified in Nicaragua, where the opposition is apparently very fierce.
The opposition by labor groups on both ends of the spectrum is fairly similar. While free trade agreements with Third-World or developing countries are typically sold as a boom to their economy, labor groups say that the boom does not trickle down to the workers. In these arguments, they often cite the North American Free Trade Agreement, which has resulted in billions of dollars of trade for Mexico but not much of an impact on the working conditions of the working poor.
John J. Sweeney, president of the 13 million-member AFL-CIO, recently penned an op-ed piece in the Boston Globe in which he railed against CAFTA, using the experience with NAFTA to make his points: "CAFTA?s big brother, NAFTA, offers evidence of how unbalanced trade deals fail workers in both rich and poor countries. NAFTA has cost U.S. workers close to 900,000 jobs and job opportunities. NAFTA was supposed to open markets for American goods and services, creating high-paying jobs at home and prosperity abroad. But the opposite has occurred. In 11 years under NAFTA, the U.S. trade deficit with Canada and Mexico ballooned to 12 times its pre-NAFTA size, reaching $111 billion in 2004."
He continued: "Nor has NAFTA delivered the promised reductions in poverty in Mexico. Mexico?s workers still struggle for basic human rights, decent wages and safe workplaces. NAFTA?s failure to protect workers? rights has allowed employers to continue thwarting independent unions organizing in Mexico?s export industries."
It is a lack of human rights issues in CAFTA that has labor and many Democrats in Congress claiming they will go after this free trade agreement with a vengeance.
In fact, Business Week, a prominent U.S.-based business publication, has also predicted that CAFTA will have difficulty passing. A recent story in that publication said that both Republicans and Democrats "have rubber-stamped a handful of minor pacts? that President Bush has proposed, but that CAFTA "promises to be a bitter battle."
Business Week theorized that it is the battle for Hispanic voters that will make this trade agreement so contentious.
?Democrats and their labor allies are closing ranks against CAFTA as harmful to workers in the U.S. and Central America. Meanwhile, the administration is ready to paint Democratic foes of the pact as anti-Hispanic," said the Business Week writer.
Vote-counters say that the Bush administration will lose some Republican votes on this pact, so to be successful, it must convince some Democrats to abandon their party?s position.
Ken Gilliland, director of international trade for Irvine, CA-based Western Growers Association, said that WGA has publicly supported CAFTA "as there is no downside for our members."
Mr. Gilliland explained that because of the Caribbean Basin Initiative of the 1980s, the countries involved in CAFTA " Guatemala, El Salvador, Nicaragua, Honduras, Costa Rica and the Dominican Republic " already enjoy duty-free shipping into the United States for most of their products.
There are some exceptions, notably sugar, but most products come into the United States with no tariff. In contrast, most U.S. fruits and vegetables headed for the CAFTA countries have a duty of 15 percent.
?Looking through the tariff schedule, some duties are a bit higher and some are a bit lower, but 15 percent appears to be the most common," he said.
Mr. Gilliland said that CAFTA will result in immediate elimination of some duties, while others will be phased out over five, 10 or 15 years. "The balance of trade for fruits and vegetables is already in their favor, so we think we have nothing to lose with this agreement."
The USDA trade statistics with Central America bolster Mr. Gilliland?s argument. In 2004, the United States exported $1.5 million worth of vegetables to the Central American region, but imported $43 million worth of vegetables. In fruits, the disparity is even greater. In 2004, Central America bought $33.8 million in U.S. fruits but sent more than $1 billion in fruit exports to the United States.
To be fair, the vast majority of those Central American fruit exports were bananas or pineapples " two crops that do not have mainland U.S. competition. But there are also significant numbers of other fruits, such as melons and papayas. As a market for U.S. fruit, grapes and apples lead the list.
?It's a nice little market for a few U.S. commodities, and with a reduction in duties, it will probably get even better," said Mr. Gilliland.
A U.S. agricultural trade expert who often lobbies Congress in the trade arena for various clients who asked for anonymity said that CAFTA is under the radar screen for most of U.S. agriculture. "The U.S. sugar lobby is going to fight it, but I don?t know of anyone else [in the ag community] lining up against it."
Dozens of trade associations representing sugar beet growers and other sugar industry components have repeatedly and publicly expressed their opposition to CAFTA. Sugar from CAFTA countries, primarily Dominican Republic and Costa Rica, has not been allowed into the United States duty free.
The anonymous trade expert said that the sugar industry lobbyists claim they were assured that sugar would be exempted from CAFTA, but it was not. The sugar lobby claims that CAFTA will result in a flooding of the U.S. market with imports and a virtual end to the U.S. sugar industry, which has experienced rough times in recent years.
There is also much opposition from labor and social activist groups around the United States and in Central America. Though Guatemala has ratified the free trade agreement, there have been public demonstrations against the pact. In fact, one such protest resulted in a death and many arrests.
On Monday, March 21, a story on National Public Radio in the United States predicted that the pact would not be ratified in Nicaragua, where the opposition is apparently very fierce.
The opposition by labor groups on both ends of the spectrum is fairly similar. While free trade agreements with Third-World or developing countries are typically sold as a boom to their economy, labor groups say that the boom does not trickle down to the workers. In these arguments, they often cite the North American Free Trade Agreement, which has resulted in billions of dollars of trade for Mexico but not much of an impact on the working conditions of the working poor.
John J. Sweeney, president of the 13 million-member AFL-CIO, recently penned an op-ed piece in the Boston Globe in which he railed against CAFTA, using the experience with NAFTA to make his points: "CAFTA?s big brother, NAFTA, offers evidence of how unbalanced trade deals fail workers in both rich and poor countries. NAFTA has cost U.S. workers close to 900,000 jobs and job opportunities. NAFTA was supposed to open markets for American goods and services, creating high-paying jobs at home and prosperity abroad. But the opposite has occurred. In 11 years under NAFTA, the U.S. trade deficit with Canada and Mexico ballooned to 12 times its pre-NAFTA size, reaching $111 billion in 2004."
He continued: "Nor has NAFTA delivered the promised reductions in poverty in Mexico. Mexico?s workers still struggle for basic human rights, decent wages and safe workplaces. NAFTA?s failure to protect workers? rights has allowed employers to continue thwarting independent unions organizing in Mexico?s export industries."
It is a lack of human rights issues in CAFTA that has labor and many Democrats in Congress claiming they will go after this free trade agreement with a vengeance.
In fact, Business Week, a prominent U.S.-based business publication, has also predicted that CAFTA will have difficulty passing. A recent story in that publication said that both Republicans and Democrats "have rubber-stamped a handful of minor pacts? that President Bush has proposed, but that CAFTA "promises to be a bitter battle."
Business Week theorized that it is the battle for Hispanic voters that will make this trade agreement so contentious.
?Democrats and their labor allies are closing ranks against CAFTA as harmful to workers in the U.S. and Central America. Meanwhile, the administration is ready to paint Democratic foes of the pact as anti-Hispanic," said the Business Week writer.
Vote-counters say that the Bush administration will lose some Republican votes on this pact, so to be successful, it must convince some Democrats to abandon their party?s position.
