Final passage of the U.S. Central America – Dominican Republic Free Trade Agreement (CAFTA-DR) is expected to be one of the largest trade policy discussions on Capitol Hill this year. With this in mind, the National Cattlemen’s Beef Association (NCBA) has conducted a thorough economic analysis of this trade agreement for our producer-members.

“Cattle ranchers were asking- 'what’s the bottom line on trade with these countries?',” says NCBA Chief Economist Gregg Doud. “Our members wanted to know what this agreement means for them.”

In summary, the economic analysis illustrates that the CAFTA-DR is a very beneficial deal for the U.S. cattle industry. The agreement was officially negotiated down to a one-way deal for increased market access and reduced tariffs. Key points of the official NCBA economic analysis revealed:

  • Overall, U.S. beef and beef variety meat exports to these nations could triple by 2015, to $41 million from the current $12.5 million.
  • The agreement will eliminate tariffs on U.S. beef exports to these nations, which currently range anywhere from 15 to 40 percent, over a 15-year period, with immediate duty-free access for high-quality (prime and choice) U.S. beef.
  • The details of this agreement basically level the playing field for U.S. beef producers.
  • Beef and cattle trade between these nations will likely increase in the coming years. Nicaragua, in particular, seems to be attempting to position itself as a dominant beef supplier to the region.
  • CAFTA exports to the U.S. will be directed by U.S. demand for lean (non-fed) beef. Constraints will include the overall profitability and growth (or lack thereof) of the beef sector in most of these countries. Beef from these countries coming into the U.S. marketplace are already subject to a quota that these countries have yet to fill, despite current low tariffs on their beef products.

“Expanding tariff-free export markets right now means growing our long-term earning potential and increasing the bottom line for our industry,” explains Texas cattle producer and NCBA President Jim McAdams. “Especially with 60 percent of our export markets still closed to U.S. beef, this is a great time to be involved with CAFTA.”

NCBA is strongly supportive of this trade agreement, and will continue to urge for it’s passage in Congress. Here’s why:

  • CAFTA-DR is an excellent deal for U.S. cattle producers, increasing valuable market access opportunities for top-quality U.S. beef products.
  • These six countries – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic currently enjoy duty free access to the U.S. market, but U.S. beef exporters currently face prohibitive tariffs as high as 40 percent.
  • This new agreement would mean elimination of tariffs and the opening of new, uncharted export markets for high-quality U.S. beef.
  • CAFTA-DR means zero tariffs and a leveling the playing field for U.S. beef.
  • CAFTA-DR is a superior opportunity to increase international visibility and demand for our distinctive U.S.-made prime and choice cuts of beef.
  • High-quality products for tourist locations are where our best money-making export opportunities lie in these nations, and this agreement gives us immediate tariff-free access for prime and choice products.
  • None of the Caribbean islands have beef production levels that would be considered large by U.S. standards, with the tourism industries in these countries being on of the largest money-making sectors. U.S. product will be targeted into tourist locations following the implementation of this agreement (this is confirmed by USMEF data).
  • CAFTA is basically a one way, win-win deal for U.S. beef. Beef from these countries coming into the U.S. marketplace is already subject to a tariff rate quota (TRQ) of 64,805 metric tons (mt). If the quota is ever filled, the agreement would allow for limited access for:  Costa Rica, 10,340 mt; El Salvador, 100 mt; Honduras, 500 mt; Nicaragua, 10,000 mt; Dominican Republic, 1,320 mt.
  • Therefore, we would never see a “flood” of beef imports after CAFTA-DR is passed, since these nations do not even fill their current quota levels for beef. In addition, CAFTA-DR does contain an agricultural safeguard mechanism that would protect the U.S. industry against excessive surges in imports if necessary.
  • This trade agreement would not affect international animal or human health regulations.
  •   With many of our beef export markets still closed due to the Dec. 23, 2003, BSE case, passage of this agreement this year would be great timing for cattle producers.

“CAFTA-DR is expected to be one of the biggest trade decisions happening in Washington D.C. this year,” says McAdams. “Cattle producers across the nation need to make their voices heard, and urge for passage.”

The economic analysis also offers a country-by-country breakdown, and is based upon information from various data sources including the U.S.Department of Agriculture (USDA) and the United Nations’ Food and Agriculture Organization (FAO). Go to: http://hill.beef.org/caftafor the full report,  or contact NCBA’s Washington D.C. office at 202-347-0228.

NCBA