The Free Trade Agreement negotiated with Central America and the Dominican Republic (CAFTA-DR) passed two early tests in mid-June, winning preliminary votes in both the Senate Finance Committee and the House Ways and Means Committee.
Next may be a vote in the full Congress. With 95% of the world's population living outside the United States, the push is on to increase U.S. pork exports around the globe, says Secretary of Agriculture Mike Johanns in a noon address at World Pork Expo last month.
“There are huge new markets out there waiting to be tapped,” he says, led by a near-frenzy of efforts to gain congressional approval for CAFTA-DR.
Intensive lobbying by nearly 80 agriculture and industry coalitions may bring the issue to a final vote by Congress after the July recess, says Kirk Ferrell, vice president for Public Policy, National Pork Producers Council (NPPC).
CAFTA-DR nations — including Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua already enjoy virtually tariff-free access to agricultural markets in the United States except for sugar, an industry in strong opposition to passage of the trade legislation.
In contrast, U.S. products sold to Central American countries face duties of more than 80%, reports Johanns.
Even so, agricultural exports to those countries were worth $1.8 billion in 2004, and pork exports totaled 12,947 tons valued at more than $20 million, he says. Tariffs for pork products average 47% and the World Trade Organization could permit them to escalate to 60%.
Times Are Changing
Dictators and civil unrest plagued Central America during the early 1980s, recalls Johanns. Today, governments have shifted, democracies are starting to flourish and economies are growing.
That makes the timing appropriate to pass CAFTA. Its approval would mean marked changes for U.S. pork export prospects.
There would be sizeable quotas through which pork could be exported duty-free, says NPPC. These quotas would increase each year until year 15, when all quotas are to be eliminated. A duty on out-of-quota pork will be phased down over time, eliminated at year 15.
Fees for bacon and pork by-products would be eliminated immediately.
Johanns points out that all six Central American countries have also agreed to recognize the U.S. meat inspection system and to accept pork from any USDA-inspected facility.
“This process continues the trade access successes we have had in the past,” says Johanns. Obviously, 2004 was the 14th-straight year of record pork exports and we just want to continue to build on that.”
Boosting U.S. Hog Prices
The approval of CAFTA-DR would continue the positive influence that U.S. pork exports have had on cash hog receipts, says NPPC.
A recent economic analysis performed by Iowa State University (ISU) agricultural economist Dermot Hayes shows that, as a direct result of CAFTA-DR, U.S. pork exports to the region will climb by 20,000 tons annually, adding 36¢/head to hog returns.
The Center for Agriculture and Rural Development (CARD) at ISU has calculated that in 2004, U.S. pork prices were $33.60/head higher than they would have been without pork exports.
Johanns discussed two other concerns being addressed by USDA.
Food safety assurance is critical for trading partners. “USDA's science-based policies are effective, helping to protect the health and well being not only of millions of American consumers, but consumers worldwide,” observes Johanns.
“We see dramatic declines in foodborne illnesses, and it demonstrates that our risk-based approach is working,” he says. Reduction in the growth and spread of pathogens are the main goals of 260 USDA food safety scientists working in 26 locations.
When it comes to food security, “9-11” changed our world forever, notes Johanns.
“We stress to our food and agricultural sector partners that homeland security issues demand our attention. If we fail to recognize that the threat is real, we will pay a very heavy price,” he warns.
USDA is working to educate producers about livestock biosecurity issues, coordinating efforts with laboratories in universities on foodborne illnesses, pre- and post-harvest food security and rapid diagnostic testing.
“We are asking everyone in the farm-to-table chain to consider homeland security a high priority,” says Johanns.