Editorial: Cattle Industry Counters Bogus CAFTA Claims
"This week, the U.S. Senate is expected to vote on the U.S. Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). We members of the National Cattlemen's Beef Association (NCBA), the oldest and largest national association representing the cattle industry, are urging our fellow cattlemen from across the nation to separate myth from reality when it comes to CAFTA.
"I'm downright stunned by some of the allegations being made within our industry about this straightforward trade agreement. The details are not a mystery. It's a lucrative deal promising growth of new export markets for U.S. beef in six nations. Creating a flurry of fabrications about CAFTA does nothing but scare people away from the superior benefits gained from being productive players in our global economy.
"NCBA must set the record straight. Here is our response to the myths being spread about CAFTA.
Bogus Claim #1: 'CAFTA would allow foreign beef to flood into our country and means we give these countries complete market access!'
FACTS:
-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.
-These are not big beef-producing nations, and their imports have never been threatening to U.S. beef. What IS a threat are the extremely high tariffs slapped on our beef exports to enter these nations. CAFTA corrects this imbalance.
-The small amount of U.S. beef imports from these CAFTA countries is primarily lean beef, not the high-quality grain-fed beef for which United States cattlemen are famous.
Bogus Claim #2: 'CAFTA sets a dangerous precedent and bad blueprint for future trade agreements with South America.'
FACTS:
-CAFTA sets an excellent precedent. All duties go to zero by the end of the agreement's implementation period, the chief necessity when making free trade deals with the United States.
- In fact, Trade Promotion Authority, the authority for the Administration to negotiate trade agreements and send the final package to Congress for a vote, currently outlines what the Administration should include in trade agreements, not previous agreements.
-CAFTA establishes an official mechanism to resolve disputes called the Committee on Agriculture, a great blueprint for resolving future issues between trading partners.
Bogus Claim #3: 'CAFTA means giving up safeguards and threatening safety.'
FACTS:
-This claim could not be further from the truth. CAFTA does contain an agricultural safeguard mechanism which would protect the U.S. industry against excessive surges.
-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 point 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.
-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.
-CAFTA requires these countries to accept the USDA-FSIS inspection system as equivalent for means of plant certification for export. 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.
Bogus Claim #4: 'For the individual cattle producer, CAFTA means less than 10-cent increase in value per head.'
FACTS:
-Overall U.S. beef and beef variety meat exports to CAFTA nations could TRIPLE by 2015 to $41 million from the current $12.5 million.
-This 10-cent claim assumes a NET of exports minus assumed additional imports from CAFTA. This figure is debunked by the fact that beef production has been in decline and will likely continue to decline in every CAFTA country except for Nicaragua.
-Per capita income improvement in this region lends itself toward more beef consumption in the region, not less.
-The KEY aspect of the agreement is that as these nations were preparing for a negotiation with the United States, the initial requirement was that they harmonize their Sanitary and Phytosanitary measures and trading regulations among themselves.
-This means that, for the first time in many cases, these countries will now be trading beef and cattle among themselves. This suggests that there will be LESS beef available to export to the U.S., not more.
-This agreement is very much a one-sided deal benefiting U.S. cattle producers, giving increased market access for U.S. interests
Bogus Claim #5: 'Visiting the CAFTA nations right now would be an effective way to become involved in this trade negotiation process'
FACTS:
-CAFTA has been negotiated during a long-term process and signed by all seven countries. The time to question CAFTA was before and during the negotiating process, not after the agreement was signed. The opportunity to affect the outcome for the industry has long since passed.
-That's why NCBA very closely monitored the negotiating process and those serving in trade advisory capacities were intimately involved in the process with our negotiators.
-NCBA was also keenly aware of the situation in Central America via numerous meetings and discussions with Central American beef producers before and during the long negotiating process. During these discussions, NCBA made it crystal clear that we would not accept anything less than duty free access to the Central American market by a date certain. These numerous discussions also gave us a clearer understanding of what might evolve in the Central American market for beef after the agreement goes into affect.
Bogus Claim #6: 'Just like NAFTA, CAFTA is a bad agreement for cattle producers'
FACTS:
-Mexico is currently our largest export market for U.S. beef. NAFTA made huge strides for the U.S. beef export industry and is an exemplary agreement.
-Studies prove NAFTA has increased disposable income by over $6,000 per family and has also helped to fuel the incredible demand growth that the beef industry has enjoyed.
Bogus Claim #7: 'CAFTA is an agreement that adds to our trade deficit with the region.'
FACTS:
-The U.S. International Trade Commission, which is required by Trade Promotion Authority to review every trade agreement, studied CAFTA-DR and found that the effect of the agreement would be to reduce the overall U.S. trade deficit by $756 million.
Bogus Claim #8: 'People living in these CAFTA nations cannot afford U.S. beef, therefore there really is no market for our products.'
FACTS:
Opening export opportunities is how we build future markets.
Trade experts agree this region is a growth market for high quality grain-fed beef that only the United States can provide to hotels and upscale restaurants.
U.S. Meat Export Federation regional market analyses states that the Central and South American region, is 'currently a market for both muscle meat and variety meat products, is a developing market for U.S. beef exports with potential for growth.'
For example, the Dominican Republic is a middle-income country whose most important sector is tourism, accounting for nearly $1.5 billion a year. It is to the tourism industries in these countries which U.S. product will be targeted following the implementation of this agreement.
"Regardless of bogus claims, the important thing for U.S. beef producers to know is that NCBA continues to be actively engaged in making sure we get the best deal possible in ANY trade agreement. We do that when the terms of the agreement are being negotiated, not after the fact.
"The long-standing history of these agreements is clear: it is greatly preferred to fix problems up front. It does no good to complain or second guess the situation after the fact.
"As a result, NCBA producer-leaders and staff, and particularly those involved in trade advisory capacities, are constantly seeking the best market information and intelligence available in order to help our negotiators get the best deal possible for U.S. beef producers in the numerous agreements currently being negotiated. Such efforts are critically important as they also set the precedent for all future agreements, no matter how big or small."
"This agreement is first and foremost about reducing foreign tariffs and opening Central American markets to U.S. products. It's an excellent deal for U.S. cattle producers and NCBA will continue to urge for passage in Congress this summer."
Source: John Queen, NCBA vice president and North Carolina cattle producer
