031228 Beef Industry Likes New Latin Trade Pact

A United States trade negotiator said the new Central America Free Trade Agreement will benefit agricultural producers and protect sensitive U.S. industries such as sugar.

The agreement reached Tuesday, pending congressional approval, would open duty- free prime and choice beef sales immediately in Honduras, El Salvador, Nicaragua and Guatemala.

The U.S. beef industry favors the pact because it opens new markets for high-quality beef. Sugar industry representatives are waiting for the full details before taking a position.

Speaking on condition of anonymity, the trade negotiator stressed that the United States was cognizant that "there were sensitive products on both sides." He fielded questions from reporters during a conference call Wednesday afternoon. Sugar sours to pact

Among the most sensitive products is sugar. Industry officials have opposed including sugar in the agreement and sugar state congressman were outspoken foes.

The proposed trade treaty would allow for the four countries to ship 85,000 tons of sugar to the United States duty free yearly once CAFTA become effective. That amount would grow at a rate of about two% each year for 15 years to 125,000 tons per year.

These amounts would be in addition to the yearly quota of 111,000 tons exported by the four to the United States under rules of the World Trade Organization.

The official said the pact gives substantial access, keeps the program quotas and the increased import was manageable under the U.S. sugar program in the farm bill. The treaty would protect Central American farmers who raise white corn, he said.

"There are too many unknowns," said Ruthann Geib, vice president of the American Sugarbeet Growers Association. "We are reluctant to support it because we are not quite sure what it means.

"Until we are familiar with the terms, we are being careful what we say," Geib said.

She added that while CAFTA gives access the industry can live with, it raises questions for the future.

"What are the implications if Costa Rica is included or for all the other countries that now have sugar export quotas to the United States," she asked?

More than 40 countries have export quotas into the United States. The quotas are adjusted each year depending on the amount of sugar produced by U.S. cane and beet farmers. Beef positive

A spokesman for the U.S. beef industry viewed the treaty as a positive for high-quality beef exports.

"The tourist and travel industry is thriving in Central America, and these hotels and restaurants are key to growing this market for U.S. beef," said Michelle Reinke, manager of trade policy for the National Cattlemen's Beef Association. Through this agreement, U.S. cattlemen will have an opportunity to expand beef exports on a duty-free basis, she said. Also, over time tariffs on other U.S. beef products are phased out. The phase-out period is 15 years.

The trade official did not know if the pact allows for future live cattle exports from Central America to the United States.

U.S. cattle and beef prices have hit record highs in 2003, in part because of increased foreign demand for high quality cuts.

Whether CAFTA will make it through Congress in a presidential election year isn't certain. Sustained opposition to the North American Free Trade Agreement passed 10 years ago remains. Many groups in the United States blame NAFTA for loss of jobs and depressed prices in the grain industry in recent years.

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