Newspaper article THE JOURNAL RECORD

Commentary: CAFTA: Economic Doom to Our Trade Partners

Newspaper article THE JOURNAL RECORD

Commentary: CAFTA: Economic Doom to Our Trade Partners

Article excerpt

Although the nation's agricultural community is deeply split over the Central American Free Trade Agreement, many leading commodity and agri-business interests have been among the deal's strongest backers. The powerful American Farm Bureau Federation, for example, calls CAFTA a golden opportunity to balance the scales of trade access. Unfortunately, close scrutiny reveals this sales pitch to be a bill of goods. Indeed, the foundation's centerpiece CAFTA study, A Vote for DR-CAFTA is a Vote for Agriculture, is flawed.

A Vote for DR-CAFTA is anything but an examination of the agreement's trade effects alone - as opposed to the U.S. International Trade Commission's official analysis of CAFTA released last August. Instead, it is a study of trade effects based on wishful thinking about Central America's future.

Focusing solely - and properly - on trade effects, the International Trade Commission predicts $328 million in increased U.S. agriculture exports to the region when CAFTA is fully implemented - that is 20 years from now. That long-run increase represents a measly 0.5 percent of 2004 U.S. global agriculture exports, and less than 20 percent of last year's U.S. agriculture exports to the CAFTA-DR countries. Due to this negligible export increase, CAFTA would raise the average American farmer's income by a grand total of $100 - in 20 years.

The American Farm Bureau Federation's prediction of $1.52 billion in CAFTA-generated export gains will also take 20 years to achieve. Yet even this best-case, long-run increase represents only 2.4 percent of last year's U.S. global agriculture exports, and would raise the average American farmer's income by only $500 in 20 years. Because most of the United States' CAFTA tariff cuts are concentrated in textiles and apparel, these are the only sectors that realistically could boost Central American export earnings and thus enable these countries to afford U.S. agriculture products and other imports. Yet textile and especially apparel production increasingly look like economic dead ends.

With the end of global quotas last Jan. 1, China and other Asian super-exporters - as every independent study predicted - began dumping oceans of subsidized textile and apparel products on world markets. …

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