Free Trade Agreement Gains Support from Agriculture and Manufacturing

Free Trade Agreement Gains Support from Agriculture and Manufacturing
June 1, 2005

John Skorburg

John Skorburg passed away on Saturday, March 22, 2014. We're keeping his bio online as a small... (read full bio)

A new push for Congressional approval of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) has officially begun. During April, separate agricultural and manufacturing coalitions released studies proclaiming the benefits of expanding free trade.

Farmers rallied for CAFTA-DR on April 11. More than 50 organizations, coming together as the Agriculture Coalition for CAFTA-DR, were joined by Mike Johanns, secretary of the U.S. Department of Agriculture, and other public and private officials at a media event in the nation's capitol. The groups are urging Congress to "pass the already negotiated agreement."



$1.5 Billion Boost Cited

According to the coalition, the trade deal would yield nearly $1.5 billion in U.S. agricultural exports to the CAFTA-DR region, providing significant opportunities for U.S. farmers and ranchers. The nations of CAFTA-DR represent the second largest market in Latin America for U.S. products.

"When you look at the aggregate, CAFTA-DR is a net positive for [U.S.] agriculture," said American Farm Bureau Federation (AFBF) President Bob Stallman. "The agreement will generate millions of dollars annually by eliminating tariffs on U.S. agricultural goods."

Tariffs on almost all U.S. products exported to CAFTA-DR nations will decrease to zero after full implementation. Currently, U.S. agriculture products entering the region without the agreement are subject to up to 60 percent tariffs.

"The United States has already paid for this agreement due to the existing Caribbean Basin Initiative (CBI), implemented in the 1980s," said Stallman. Under the CBI, 99 percent of the agricultural exports from the CAFTA-DR region are already entering the United States duty-free.

"This agreement provides balance and places U.S. agriculture in a competitive advantage by removing significantly high tariff barriers to CAFTA-DR nations," Stallman said.

Terry Gilbert, a cattle, hay, and corn producer from Kentucky and chairperson of AFBF's Women's Committee, represented Farm Bureau at the April 11 event.

"Our producers support CAFTA-DR because it is a win-win for agriculture," she told the crowd. "It will expand opportunities in the world marketplace while providing economic growth and security for our farmers and ranchers here at home."



Study Cites 'Overwhelming Benefits'

Also on April 11, the coalition released a study showing CAFTA-DR provides "overwhelming benefits for American agriculture."

The study examines the benefits of CAFTA-DR for 40 congressional districts with significant agricultural production. According to an Agriculture Coalition news release, research found "exceptional evidence that the CAFTA-DR will greatly benefit local economies in these agricultural-rich communities."

Conducted by former Farm Bureau Chief Economist Ross Korves, now an independent economic policy analyst, the study used U.S. Department of Agriculture (USDA) Census of Agriculture data as well as publicly available information from the American Farm Bureau Federation to show the positives of free trade with Latin America.



Praises Level Playing Field

The CAFTA-DR is "unambiguously a winner" for U.S. manufacturing, according to an analysis by the National Association of Manufacturers (NAM), released on April 7. The NAM study says the agreement will "level the playing field for U.S. exporters by providing the same open access to CAFTA-DR markets that these countries already have to the U.S. market."

"This study reiterates why this agreement should be a no-brainer," said John Engler, president of NAM. "CAFTA-DR will level the playing field for U.S. manufacturers, generate $1 billion of new U.S. manufacturing exports, save billions of dollars in existing exports, promote democracy and political stability, and improve the labor and environmental conditions in the region."

In a NAM media statement, Engler said, "People who claim that CAFTA-DR will have a detrimental impact on the U.S. economy are seriously mistaken. Together these seven countries have an economy the size of Sacramento, California. To say they pose a major threat to us is ludicrous.

"On the other hand, they offer a major opportunity for U.S. exporters," Engler continued. "The NAM analysis concludes that CAFTA-DR will provide U.S. manufacturers $1 billion of additional manufactured goods exports, creating some 12,000 related job opportunities for American workers in the process. But without the agreement, the U.S. stands to lose up to $4 billion in existing exports to CAFTA countries, affecting up to 48,000 U.S. jobs."



Asian Competition Cited

Engler said failure to approve CAFTA-DR would effectively shift business from Central America to Asia. "If these countries were to lose their apparel industry to Asia, particularly China, more than half a million people in the region would be put out of work," Engler said. "Can you imagine the effect this would have on political stability in the region and the pressure it would create to migrate to the United States? CAFTA-DR needs to be passed at the earliest possible opportunity."


John W. Skorburg (skorburg@heartland.org) is a visiting lecturer in economics at the University of Illinois-Chicago and associate editor of Budget & Tax News.


For more information ...

The study conducted by Ross Korves for the Agriculture Coalition for CAFTA-DR is available online at http://www.nppc.org/hot_topics/40districts.html and, with other CAFTA-DR information, at http://www.uscafta.org.

The National Association of Manufacturers analysis can be found on the group's Web site at http://www.nam.org/caftadrstudy.

John Skorburg

John Skorburg passed away on Saturday, March 22, 2014. We're keeping his bio online as a small... (read full bio)