CAFTA May Be Trade Story Of 2005 - WASHINGTON, DC - The move to win approval for the Central American Free Trade Agreement (CAFTA) when it's presented to Congress for ratification will be "the trade fight of 2005" and one that "the whole world will be watching," according to Assistant U.S. Trade Representative Chris Padilla, reported Feedstuffs.

The agreement is an important pact for the CAFTA region and U.S. and an important part of the future of U.S. participation in global trade, he said, suggesting that the agreement is one on which both trade opponents and supporters have "staked their ground."

If the Administration succeeds and wins ratification, a lot of success will follow in other trade agreements and the current Doha Round of the World Trade Organization, he said, but if opponents prevail, "we will lose a lot of momentum" toward free trade. Non-ratification would "send a signal" to the world that, as the U.S. can't do a trade agreement with six countries in its own backyard, it certainly can't do a WTO agreement, he said.

Padilla expressed his views in talking with reporters at a breakfast hosted by the National Pork Producers Council (NPPC) at the National Pork Industry Forum recently.

CAFTA covers Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic and represents the second-biggest export market for the U.S. in Latin America, following Mexico, and the 13th-biggest export market for the U.S. in the world. The U.S. exports more products to the CAFTA region than to Australia.

It has also been mostly "one way" as far as free trade is concerned, Padilla said, explaining that 99% of products the U.S. brings in from the region are imported duty free due to past unilateral agreements while the U.S. pays "hefty" tariffs of 15-47% on products it sells to the region. CAFTA would end some of those tariffs immediately and reduce others over 10-20 years, he said.

CAFTA would create a level trading field for the U.S., and non-ratification would only penalize American manufacturers and producers, he said. "We need to get this message out."

When asked who would oppose such an agreement, Padilla said the sugar industry "is the number-one and number-two opponent," having mounted a major campaign against the agreement to protect its U.S. markets.

He said the agreement was carefully negotiated to address this issue and would allow in duty free, per year CAFTA sugar representing just one day's production of U.S. sugar. Putting this another way, he said the average daily sugar consumption by Americans is 20 teaspoons, while CAFTA sugar would represent 1.5 teaspoons per week.

"We sized this so there would be no effect on the U.S. sugar industry," he said. Padilla said the U.S. could go to the CAFTA negotiators and propose that sugar be precluded, but they would then develop a list of commodities from the U.S., one of which would have to be precluded. "So, we would have to come back and look at our producers and ask who is willing to continue paying tariffs so we can keep out a gram of sugar," he said.

"We have to get this message out, too, and we need U.S. agriculture groups to stand up" for CAFTA, he said.

Padilla also said another opponent is organized labor, which has said CAFTA-region labor laws are weak, but he said labor opposes all trade agreements on those grounds, including the Australian trade package, even though Australia has a higher minimum wage than the U.S.

According to Feedstuffs, Padilla said another issue is that the agreement would support fledgling Central American democracies that were only recently ruled by dictators and guns. He recalled that a snow pea producer in one of the CAFTA countries told him how linking "our economy with yours through trade will make our economy stronger and support our democracy."

Trade "builds democracy and rule of law," he said, noting that the CAFTA countries support the U.S. in the war on terror "and now want to open their markets to us." Why would anyone not support the CAFTA opportunities, he wondered?

He noted that trade agreements have consistently improved environmental stewardship, human rights, labor laws and other important issues, and CAFTA has been written to promote the same things.

Padilla said the agreement will go to Congress soon and likely will be voted down or up by Memorial Day.

The agreement has been ratified by El Salvador, Guatemala and Honduras.

Source: National Pork Producers Council (NPPC) - 23rd March 2005