CAFTA-DR Revisited

Η.Π.Α.. Agriculture Secretary Ed Schafer led a trade and investment mission with 17 Η.Π.Α.. agribusinesses to Central America to meet with 70 local companies from CAFTA-DR countries. The seven countries (οι ΗΠΑ., Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua) signed the Central American – Dominican Republic Free Trade Agreement (CAFTA-DR) in August of 2004. Agricultural trade was already growing between the U.S. and the six countries and has since accelerated.

Οι ΗΠΑ. and El Salvador where the first to put the agreement into affect in March of 2006. Honduras and Nicaragua followed in April of 2006, as did Guatemala in July of 2006 and the Dominican Republic in March of 2007. Costa Rica will implement it beginning October 1, 2008. Half of U.S. farm exports enter tariff-free when the agreement takes affect. These include high-quality beef, σόγια, βαμβάκι, σιτάρι, many fruits and vegetables, and processed food products. Tariffs on most other U.S. farm products are phased out over 15 years with almost all tariffs eliminated in 20 χρόνια. All products are included in the agreement with increased market access through tariff reductions and/or tariff-rate quota (TRQ) expansions. Οι ΗΠΑ. provides the same tariff treatment for each country, but has country-specific commitments on TRQs. Tariffs will ultimately be eliminated for all products, except for sugar to the U.S., fresh potatoes and fresh onions to Costa Rica, and white corn to the other Central American countries.

Σε 2004 when CAFTA-DR was finalized U.S. agricultural exports to the six countries totaled $1.71 δισεκατομμύριο, πάνω 8.9 τοις εκατό από 2003. Exports increased 9.9 τοις εκατό 2005. Exports increased another 18.6 τοις εκατό 2006 when the agreements began to be implemented in four of the six countries. Exports were up by 26.0 τοις εκατό 2007 προς το $2.81 δισεκατομμύριο, but that was partly influenced by the rapid increase in commodity prices that began in October 2006. For the first seven months of 2008 exports were up 48.4 percent over the same period in 2007.

Σε 2004 bulk commodity exports at $942 εκατομμύριο, mostly wheat, course grains and rice, accounted for 55.2 percent of total agricultural exports. This remained almost unchanged for the following three year and was at 53.8 percent for the first seven months of 2008. Intermediate products at $390 million in 2004, led by soybean meal and oil, animal fats and animal feeds and fodders, have had a steadily growing share of U.S. agricultural exports from 22.9 τοις εκατό 2004 προς το 28.4 percent in the first seven months of 2008. Consumer-oriented products at $373 million in 2004 trended downward as a percent of total agricultural exports from 21.9 τοις εκατό 2004 προς το 17.7 τοις εκατό 2008. Exports of consumer-oriented products were up 36.3 percent in the first seven months of 2008, but were out paced by growth in intermediate products of 59.9 percent and bulk commodities at 47.1 τοις εκατό.

Imports of agricultural products from the CAFTA-DR countries have grown from $2.47 billion in 2004 προς το $3.43 billion in 2007 with imports for the first seven months of 2008 πάνω 10.8 percent from a year earlier. Imports are dominated by bananas and plantains at $752 εκατομμύριο, unroasted coffee at $739 million and fresh fruit at $625 εκατομμύριο. Sugar and sweetener imports totaled $280 εκατομμύριο. The other imports are mostly consumer-oriented products such as fruits, λαχανικά, juices, nursery products and cut flowers.

The next step in U.S. exports will be in intermediate and consumer-oriented products. Many of those products were not provided immediate tariff-free access. They mostly had high tariffs before CAFTA-DR, and TRQs were created with increasing volumes over the next 15-20 χρόνια. Some products have immediate zero tariffs within the TRQs and other have tariffs that decline at some point in the future. Individual countries have the right to increase TRQ volumes and lower tariffs at a faster rate than the minimum.

The countries agreed to use the science-based disciplines of the World Trade Organization Agreement on Sanitary and Phytosanitary (SPS) μέτρα. Οι ΗΠΑ. also agreed to provide the six countries with technical assistance and training for programs to standardize SPS requirements for animal and plant health and food safety programs and to improve customs procedures and protect intellectual property rights. These efforts have begun and have reduced disagreements over meats and other animal products.

Η.Π.Α.. agricultural exports to the CAFTA-DR countries in coming years will be largely driven by economic growth. Since more open trade helps to increase economic growth, a general approach toward freer trade for a country, not just an agreement with the U.S., is important. A recent analysis by the Heritage Foundation indicated that the CAFTA-DR countries are relatively open to trade. Οι ΗΠΑ. was ranked 13th out of 179 countries with a score of 86.8. Costa Rica and El Salvador were tied at 53rd with a score of 81.8. Nicaragua was 77th at 79.2, followed closely by Guatemala at 81st with 78.4 and Honduras ranked 84th with a score of 78.0. The Dominican Republic was 99th with a 73.0. For comparison purposes, China was ranked 111 with a score of 71.4, μικρό. Korea at 120 with a 70.2 and Russia at 152 with a 60.8.

Economic growth has been moderately strong in most of the countries with the Dominican Republic leading at 8.5 τοις εκατό 2007 followed by Costa Rica at 6.8 percent and Honduras at 6.3 τοις εκατό. Guatemala was slower at 5.7 percent GDP growth in 2007 followed by El Salvador at 4.7 percent and Nicaragua at 3.8 τοις εκατό. Higher commodity prices and a slowing world economy may present more challenges for the seven countries in the months ahead, but CAFTA-DR has had a promising beginning on which to build further increases in agricultural trade.