By Gregg Doud, NCBA Chief Economist
"While the U.S. Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) is today being debated on the floor of the U.S. Senate, a few cattlemen continue to make erroneous comments regarding this agreement based upon a whimsical trip to the tropics.
"The fact is, the time to question CAFTA and actually affect the outcome for our industry was during the negotiating process, not after the agreement has been signed by all seven participating countries. The terms of the agreement for U.S. beef were decided a long time ago, and NCBA was there for cattle producers, in the middle of it, making sure the terms of the agreement would most benefit the cattle industry.
"On behalf of cattle producers across the nation, we have been intimately involved in the long-term negotiation process of this agreement to ensure beef was handled properly and given the market access opportunities it deserved.
"On numerous occasions, we met with Central American beef producers over the lengthy negotiating process and we are keenly aware of the unique market situation in each of these Central American nations. This agreement is a well thought-out deal for U.S. cattle producers, offering immediate market access for our products. Therefore, we will continue to counter bogus claims from within our industry tossed out at the eleventh hour of this process.
Latest Claim #1: ‘The language in CAFTA-DR allows free and unfettered access to U.S.markets for Central American beef.’
FACTS: This statement is absolutely incorrect. Right now, beef products from these nations are already coming in freely, without tariffs. In fact, beef exports from these countries are subject to a tariff rate quota (TRQ) of 64,805 metric tons (mt), and this quota has never been filled. This agreement levels the playing field by giving U.S. producers access to these markets.
Latest Claim #2:‘Both Costa Ricaand Nicaraguahave strict mandatory food-labeling laws, and CAFTA-DR language prohibits many cuts of U.S.beef from entering either Costa Ricaor Nicaraguafor up to seven years.’
FACTS: This statement is absolutely incorrect. The agreement immediately offers ZERO tariffs for our most promising money-making exports: Prime and Choice cuts, while eventually lowering ALL tariffs permanently to ZERO. Only Costa Rica and Nicaragua are allowed beef-specific safeguards on U.S. beef, but these do not cover high-quality beef and are completely eliminated after 15 years. This is trade negotiation at its finest. Our premiere selling opportunity in these countries is top quality U.S. beef not found anywhere else. Therefore, some flexibility was temporarily made for standard quality beef to gain immediate access for prime and choice. Having all duties go to zero by the end of the agreement’s implementation period is the chief necessity when making free trade deals with the United States.
Latest Claim #3:‘Nicaraguan law prohibits the importation of U.S.beef processed in plants not certified by Nicaraguan authorities. Nicaraguan authorities have never undertaken inspection of U.S.plants.’
FACTS:By ratifying this agreement and agreeing to trade under these terms, all of the CAFTA-DR countries have agreed to accept the USDA-FSIS inspection system as equivalent for means of plant certification for export. CAFTA does not change safety standards. Imports from these countries are already subject to a rigorous USDA-equivalent inspection process before entering the United States. Countries cannot come to the United States and inspect plant-by-plant to find a reason to shut off exports, The entire federal inspection system must be approved. CAFTA’s entire premise for beef is based on an agreement of system-wide equivalency as part of the sanitary and phytosanitary negotiations of the agreement. The U.S. beef industry has insisted on these provisions in every agreement since the Chile FTA as a way to prevent disruptions in trade for U.S. beef exports.
Latest Claim #4:‘A local Costa Rican slaughter facility was inspected after admittance into a U.S.Department of Agriculture (USDA) slaughter plant was refused, although a previous appointment had been made and approved…the plant was sub-standard…”
FACTS:Only USDA-inspected plants are eligible to export beef to the U.S., and these plants must be annually inspected to continue to export. CAFTA does nothing to change already well-established trade regulations. The plant referenced above was not approved by USDA for export to the United States, so its condition is irrelevant. And most importantly, beef products from CAFTA nations are already coming freely into the United States.CAFTA does nothing to change this, but does eliminate prohibitive tariffs on U.S. beef exports to CAFTA nations.
Latest Claim #5:‘Nicaragua and Costa Rica are presently shipping large numbers of feeder cattle to Mexico duty-free to take unfair advantage of duty-free North American Free Trade Agreement (NAFTA) benefits.’
FACTS: Again, irrelevant. Feeder cattle can already enter the U.S. from Central America duty-free under the Caribbean Basin Initiative (CBI) preference program. The DR-CAFTA agreement will have no impact on the treatment of feeder cattle trade. They still must meet U.S. health and quarantine requirements. Finally, according to official data from the U.S. Meat Export Federation, from 2000-2004 Mexico imported ZERO feeder cattle from Costa Rica.
Latest Claim #6:‘Expansion of the national cattle herd in Nicaraguais well underway.’
FACTS:We’ve said it so many times, but let’s go over this again. This well-known finding is completely irrelevant as it relates to passage of CAFTA-DR because Nicaragua and the other CAFTA-DR countries already have duty-free access to our market. We deserve the same access to their market as they already have to ours!
“It is irresponsible to claim CAFTA will lead to a flood of Central American beef and cattle. It’s just patently incorrect. These countries currently enjoy duty free access to the U.S. market, are already subject to a tariff rate quota (TRQ), and this quota has never been filled.
“What does come into the U.S. from these nations is lean beef, which certainly has never been a threat to our high-quality beef. For decades, the United States has been the largest importer in the world of lean beef products, used especially for fast-food hamburgers.
“The next time this group goes to Central America, they should enjoy a great U.S. Prime or Choice steak and come back with suntans.”