CAFTA Brings Out the Worst in Anti-trade Rhetoric

by Jim Peterson

July 11, 2005

The U.S.-Central American-Dominican Republic Free Trade Agreement, popularly known as CAFTA, has the potential to provide a boost for American agricultural exports, including beef. CAFTA was approved on June 30 by the U.S. Senate, and appears to be headed for an up-or-down vote in the U.S. House of Representatives later this month.

As a cattle producer, I am frustrated with the slow pace at which we are regaining our export markets that closed as a result of BSE. While we are making progress, U.S. cattlemen need access to every export market we can get.

The CAFTA nations represent just such an opportunity. These markets are open to U.S. beef exports, but they are saddled with tariffs as high as 40 percent. Meanwhile, beef imported into the United States from these countries is completely duty-free, up to certain tariff rate quotas. These quotas have never been filled, so we are playing on a very lopsided field – our beef is weighed down by prohibitive tariffs, while their beef currently flows into our country duty-free.

CAFTA would immediately remove tariffs on high-quality cuts of U.S. beef, which is critical to gaining access to the growing hotel and resort industry in these nations. CAFTA eventually phases out all tariffs on U.S. beef, which will be a great help to us in exporting tongue, liver and other variety meats.

But if there is one thing we know for sure about free trade agreements, it’s that they will always give rise to distortions and misinformation. CAFTA is certainly no exception. Despite the obvious benefits for U.S. cattlemen, there are those in our industry who oppose trade, and would rather we limit ourselves to the domestic market. They would have you believe that CAFTA will harm the U.S. beef industry. But it’s important to separate the facts from the isolationist rhetoric being tossed around by CAFTA opponents.  Here are a few examples:

• CAFTA will compromise the safety of beef and the U.S. cattle herd.

            CAFTA does nothing to reduce safety standards for beef or cattle imported from these nations. The United States retains all rights to restrict or prohibit any imports from these nations that present a health or safety risk.

• CAFTA will allow cattle from Brazil and Argentina cattle to be “laundered” into the United States, flooding us with imported beef.

            Despite the fact that CAFTA nations presently have duty-free access to the U.S. market, neither Brazil nor Argentina has exported a single live cow to any of these nations in at least ten years. If someone was really hatching an elaborate scheme to flood the United States with South American beef, it would already be happening. Passing CAFTA can’t cause this to happen, and rejecting CAFTA can’t prevent it from happening. It is simply a baseless and irrelevant argument. And as noted above, CAFTA does nothing to weaken restrictions on imports from South American nations where foot-and-mouth disease or other animal health problems exist.

• CAFTA will add to our trade deficit with this region.

            The U.S. International Trade Commission studied CAFTA and found that the  agreement would reduce the overall U.S. trade deficit by $756 million.

• People in CAFTA nations can’t afford U.S. beef.

By 2015, beef exports to CAFTA nations are expected to rise to $41 million annually, from the current $12.5 million. Regardless of income levels, everyone is better able to afford U.S. beef when it is not saddled with 40 percent duties!

• The United States gives up too much in this agreement, for such a small gain in export markets.

We give up nothing in terms of beef trade. We are simply demanding a level playing field and a fair opportunity to export to nations that already have access to our markets.  We’ll never turn back the clock and close our markets to imports from these countries, so let’s get proactive and increase our exports to them.

With 96 percent of the world’s population living outside of the United States, we know that exports are critical to our ability to grow our industry. For my money, there’s no such thing as a small export market. Exports are no longer a luxury for American agriculture – they are critical to our profitability.

CAFTA provides an excellent blueprint for fair trade agreements with developing nations. We need trade policy that ensures the products we produce are not disadvantaged and discriminated against in the world market. CAFTA does exactly that, by lifting the tariff burden from U.S. beef. This dramatically increases the purchasing power of our customer, without cutting into the prices or profits of cattle producers. No amount of baseless rhetoric can make me turn away from an agreement like this. I urge all of my fellow cattlemen to learn the facts, and contact members of the U.S. House of Representatives to ask for final approval of CAFTA.

Jim Peterson is a cattleman from Buffalo, Montana. He chairs the Beef Committee of the U.S. Meat Export Federation, serves on USDA’s Agricultural Technical Advisory Committee (ATAC) for International Trade, and is a member of the National Cattlemen’s Beef Association.

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