CAFTA a victory for food makers, says GMA

- Last updated on GMT

Related tags: International trade

The Grocery Manufacturers Association (GMA) has hailed the House of
Representatives' passing of the Central American - Dominican
Republic Free Trade Agreement (CAFTA-DR) as victory for US food

"This trade agreement will lead to clear gains for the U.S. food, beverage and consumer products industry, and its more than 2.5 million employees,"​ said GMA president Manly Molpus after the House passed the bill by just two votes.

"With the elimination of these onerous tariffs, food companies will be able to increase their exports to the CAFTA-DR region by as much as 84 percent.

"Companies will also save $8.8 million from tariff reductions and quota expansions in the first year of the agreement - savings that will increase to $28 million annually when it is fully implemented."

The National Corn Growers Association (NCGA) also welcomed the measure, saying it would "level the playing field for US agriculture and advance fair trade".

"The House sent the right message in passing CAFTA-DR; the United Stated is committed to free and fair trade and economic growth among our nations,"​ said Leon Corzine, NCGA president.

"This agreement creates significant and much-needed opportunity for U.S. farmers, businesses consumers and our nation as a whole."

The NGHA claims that CAFTA-DR will provide immediate duty-free access to more than half of all US agricultural exports to the region and will enhance US agricultural exports by $1.5 billion when fully implemented.

It could also impact on future agreements. "Passage of CAFTA-DR helps future agreements in addition to strengthening the U.S. negotiator's hand in the World Trade Organization and the DOHA Rounds,"​ said Corzine.

Some analysts however have called for a note of caution. "The door swings both ways,"​ said Arjan van de Wall, Euler Hermes ACI senior vice president and director of international development.

"Without the tariffs, more US goods can be shipped to Latin America, which will be beneficial to American businesses. But the increased amount of exposure combined with the less stable economies in certain parts of Central America mean a bigger financial risk in entering these new markets."

Nonetheless the vote, which ends contentious and sometimes rancorous debate, is also an important victory for President Bush who traveled to Capitol Hill last week in a last-ditch bid to secure votes.

Rep. Bill Thomas, who chairs the House Ways and Means Committee, accused Democratic opponents of spreading "protectionism ... (and) fear."​ Only 15 Democrats backed the measure. In addition, some Republicans from sugar-producing states such as Florida opposed the bill.

The bottom line is that CAFTA will eliminate tariffs on 80 percent of US exports to the countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Experts expect an increase in trade to these areas, as companies will now save nearly $15 billion per year through the tariff elimination.

Related topics: Regulation

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