Industry groups claim that the benefits NAFTA has brought to the US food industry shows why Congress must ratify the Central American Free Trade Agreement, though the vote is likely to be close, writes Anthony Fletcher.
"We are strongly supporting CAFTA (Central American Free Trade Agreement) because it is clearly beneficial," American Farm Bureau Federation president Bob Stallman told FoodNavigator-USA.com.
"Under NAFTA, trade flows have increased in all three countries (US, Canada and Mexico) and the US still has a better trade surplus."
Indeed, a recent American Farm Bureau Federation (AFBF) report claims that exports of food and agricultural products to Canada and Mexico have more than doubled from $8.9 billion in 1993, the year before the North American Free Trade Agreement (NAFTA) went into effect, to $18.2 billion in 2004.
Record highs were also set last year for US exports of consumer-ready products to Canada such as snack foods.
And according to US department of agriculture (USDA) figures, these increased exports support nearly 300,000 jobs in the United States, in addition to those within the farm sector.
" Central American Free Trade Agreement (CAFTA) and NAFTA are different agreements with different trade partners, tariff reductions and other terms," said Megan Provost, AFBF trade economist and author of the AFBF report.
"But, 10 years down the road, it is a good time to look at whether lowering barriers to trade, particularly with developing countries, has been a positive or a negative. We think it's been very positive."
If passed, CAFTA would eliminate most tariffs between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. A recent AFBF analysis claims that US agricultural exports would increase by $1.5 billion per year after full implementation of the agreement in 2024.
"The present bill's passage is hard to predict, but I think what we're seeing is growing momentum for the support of the bill,"said Stallman.
However Dave Frederickson of the National Farmers Union (NFU) believes that opposition to CAFTA is growing. He points to Senator Saxby Chambliss, (R-Ga), chairman of the Senate agriculture, nutrition and forestry committee, who recently joined the growing chorus of CAFTA opposition.
"I am very concerned about the Central America Free Trade Agreement," said Chambliss. "As it currently stands I will vote against the agreement when it comes to the Floor."
Opponents of CAFTA argue that the estimates of sizable trade gains for the US are overly optimistic. Frederickson for example argues that with a combined population of approximately 31 million people and with limited incomes, CAFTA nations have little purchasing power.
"Many key US commodities already have virtually open access and control of the Central American market - according to the most recent data, the United States supplied 94 percent of all grains imports into the six CAFTA countries," said Frederickson. "Even government economic analysis says that under CAFTA the US deficit with the region will grow by another billion dollars."
The AFBF contends however that such opposition to CAFTA is ill-founded. It points out that when president George H.W. Bush signed NAFTA in 1992, some warned that it would devastate the US economy. But according to the AFBF report and government statistics, the US economy has grown 38 percent since NAFTA was signed.
"I think the sugar industry is the only commodity group against CAFTA, because they are likely to only get a small increase in market access," said Stallman.
Congress is expected to vote this year on whether to ratify CAFTA. "Congressional leaders have indicated that they would like to decide in July," said Stallman.
The Bush administration signed CAFTA with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua last year. The AFBF is urging Congress to pass the measure, while the NFU continues to oppose its implementation.