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U.S. negotiators sign off on CAFTA

Under the Central America Free Trade Agreement, Veneman says, “Our agricultural exports will compete more favorably in this nearby and growing market of 31 million consumers. CAFTA will provide expanded opportunities right here in our own Hemisphere. That’s positive news for agriculture, on top of our already strong agricultural economy.”

Signing the agreement along with the United States are El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica, objecting to provisions that required it to give more access to its markets to U.S. insurance companies, pulled out of the talks at the last minute. U.S. trade officials are scheduled to meet next week with Costa Rica’s trade minister

“We expect new and expanded market access for a broad range of U.S. commodities,” said Veneman. “These include feed grains, rice, beef, pork, poultry, horticultural products and processed consumer-ready products, to name just a few. Under this agreement, U.S. agricultural exports – now near $1 billion a year – will compete more favorably in this nearby and growing market of 31 million consumers.”

She said the comprehensive agreement embodies the general principles regarding duty-free, quota-free access for all agricultural products. It also addresses other important trade measures, she added.

“All countries have renewed their commitment to continue the work on resolving continuing sanitary and phytosanitary issues that inhibit market access,” she said.

Veneman further assured producers that provisions are in place to provide additional protection to import-sensitive products such as sugar, dairy, peanuts and meat during the transition period.

Depending on the products, she said, these provisions could include tariff-rate quotas, long-term tariff phase-outs, nonlinear tariff reductions, and the application of an import safeguard mechanism.

“This is yet another positive development for our currently strong agricultural economy. This agreement will provide expanding long-term opportunities for our producers in a growth market right here in our hemisphere.”

Meanwhile, early reaction from U.S. commodity groups was mostly positive. The National Corn Growers Association (NCGA) and the U.S. Grains Council voiced support for CAFTA.

“The agreement is a good deal for corn growers and the grain industry overall,” said Dee Vaughn, NCGA president. “We are extremely pleased with the hard work of Ambassador Zoellick, Allen Johnson and the U.S. negotiating team.”

Terry Wolf, U.S. Grains Council chairman, added, “The agreement will offer immediate duty-free access for more than 1 million metric tons of U.S. corn, with tariffs dropping to zero in all four countries within 15 years. The market potential for U.S. feed grains is extremely high, and demand will grow due to this historic agreement.”

But one group, the National Textile Association, denounced the agreement. “This regional free trade agreement will open the U.S. textile and apparel markets to a flood of imports from El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica has been part of the negotiation, but withdrew in the final hours from this seriously flawed agreement, the NTA said.

The NCGA’s Vaughn said corn growers “should be particularly pleased with this agreement since the Central Americans consider corn to be a sensitive commodity. Tariff elimination for feed grains and products like meat and pork result in U.S. free trade agreements that benefit U.S. farmers.”

Wolf said the pact would expand trade with other Latin American countries. “Future negotiations with countries such as the Dominican Republic, Panama and Columbia will broaden market access for U.S. feed grains to more than two-thirds of the population in the Western Hemisphere. Feed grains win in a free trade environment, and we look forward to working with the administration in pursuit of this goal.”


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