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cattle producer groups are lining up on both sides

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HAY MAKER

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-----Subject: R-CALF/CAFTA


This was a recent article discussing R-CALF and NCBA’s position on the Central American Free Trade Agreement. The article did a good job of illustrating both sides. However, we have pointed out and will continue to call out NCBA on the fact that the CAFTA does not have the safeguard provisions that the NCBA claims that it does. The CAFTA agreement will not be much of an export market for US beef. The reason for this agreement is simply to build up the CAFTA countries’ beef industry and allow them access to a top export market – the U.S, and without safeguards will place the U.S. cattle industry at a competitive disadvantage. Granted we most likely won’t see a “flood” of beef imports, we will see an increase and this agreement without safeguards is an example of a trade destructive, not a trade enhancing agreement, especially as we compare this as the prototype for the free trade agreements with massive cattle producers Brazil and Argentina. – Jess





On-line publication of
THE WEEKLY LIVESTOCK REPORTER
Fort Worth, TX



http://www.weeklylivestock.com/



Saturday's Internet Edition, 10:15 PM, April 2, 2005.



Cattle Groups Debate Merits Of CAFTA
Kansas City (Dow Jones) — As the debate on Capitol Hill over the Central America-Dominican Republic Free Trade Agreement draws closer, U.S. cattle producer groups are lining up on both sides of the issue.
The National Cattlemen’s Beef Association and R-CALF United Stockgrowers of America look at the agreement differently. One says it offers great export opportunities, while R-CALF USA says it sets a bad precedent.
Jess Peterson, director of government relations for R-CALF USA said R-CALF USA is asking that safeguards be put in place that protect U.S. cattle producers’ ability to compete. He pointed to the safeguards that were inserted into the U.S./Australia FTA as examples of what should be done with all FTA’s.
The Australia agreement listed cattle and beef as perishable and cyclical commodities, and thus was given a Tariff-Rate Quota that kicks in when the price of U.S. cattle gets below the cost of production. Increased access to U.S. markets also doesn’t start until the U.S. has regained its own export markets, lost when bovine spongiform encephalopathy, or mad-cow disease, was discovered in Washington state.
Once started, the Australian agreement also-has an 18-year phase in period that allows U.S. markets to adjust, Peterson said.
Without a TRQ in the agreement, the U.S. runs the risk of importing enough cheap beef to pressure U.S. prices, Peterson said.
And, Peterson said the agreement isn’t quite tariff-free for all of the CAFTA countries. Costa Rica still has safeguards on U.S. exports, he said.
Besides, the export opportunities for the U.S. industry are small, Peterson said. It’s supposed to offer the chance for exports of high-quality product to the hotel and restaurant sector. CAFTA countries will be able to import U.S. grain and grow their own cattle industry to fill all the high-quality beef needs of the hotels and restaurants, he said.
But according to NCBA Chief Economist Gregg Doud, the key points of an NCBA economic analysis revealed:
- Overall, U.S. beef and beef variety meat exports to the Central American nations of El Salvador, Costa Rica, Dominican Republic, Honduras, Nicaragua and Guatemala 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 percent to 40 percent, over a 15-year period, with immediate duty-free access for high-quality (prime and choice) U.S. beef.
- 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, the NCBA said. 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.
Beef from these countries coming into the U.S. already is subject to a TRQ of 64,805 metric tons. If the quota is ever filled, the agreement would allow for limited access for: Costa Rica, 10,340 tons; El Salvador, 100 tons; Honduras, 500 tons; Nicaragua, 10,000 tons, and the Dominican Republic, 1,320 tons.
Therefore, the U.S. 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, the NCBA said. 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 also would not affect international animal or human health regulations, the NCBA said.
 

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