|
|
|
|
|
By Mike Barnett
Editor
U.S. beef should be a big winner in the recently passed Central American Free Trade Agreement (CAFTA), but there's potential for an increase in other commodities as well.
According to Cooperative Extension agricultural economist Parr Rosson, the tariffs on beef, which now range from 15 percent to 30 percent, will vanish when the agreement is implemented by the countries involved. With the agreement's phase-in, according to Rosson, beef sales to the Central American countries should be boosted from the current $10 million in sales to about $70 million.
"While the high-quality beef is duty-free immediately, the lower quality is phased in over a longer period of time, over 18 years," he said. "We won't see the impacts on the lower-quality beef for a while."
When the lower-quality beef is phased in, that will boost total U.S. beef exports to that region to about $74 million. That could translate to another 1,600 jobs in the beef industry and about another $60 million in income, he said.
With beef providing over half of the state's farm cash receipts of $7.8 billion, and as the nation's third largest exporter of live animals and meat, Texas cattle and calf producers stand to benefit from the trade agreement. According to an American Farm Bureau economic analysis, Texas will increase meat (beef and pork) exports to the six countries in the trade agreement by $113 million per year by 2024.
Cotton also will be duty-free immediately, so Rosson expects more of that commodity to be exported. Texas is the nation's top cotton exporter with farm cash receipts totaling $1.3 billion. Under the World Trade Organization (WTO), CAFTA countries could raise tariffs on cotton to 35 to 60 percent, depending on the country. CAFTA immediately locks in zero tariffs for markets worth over $55 million to United States cotton suppliers. The AFBF analysis estimates that Texas will increase cotton exports to the six countries by $4 million per year by 2024.
Here's how the CAFTA agreement will affect other Texas commodities, with data drawn from the AFBF economic analysis:
• Poultry—Providing the fourth largest source of state farm cash receipts at over $1 billion, AFBF estimates increased poultry exports to the six countries worth $23 million per year by 2024.
• Dairy—Providing the fifth largest source of state farm cash receipts, AFBF estimates that Texas will increase dairy exports to the six countries by $1.5 million per year by 2024.
• Corn—As the nation's 7th largest exporter of feed grains, AFBF estimates that Texas will increase feed grain exports to the six countries by $1 million a year by 2024.
• Rice—With $82 million in farm cash receipts, AFBF estimates that Texas will increase rice exports to the six countries by $1 million per year by 2024.
• Sugar—AFBF estimates that Texas will lose $2 million from increased sugar imports from the six countries per year by 2024.
The export market for U.S. agricultural products to Central America is worth $1.7 billion. That's a small part of total U.S. agricultural exports of $60 billion, Rosson said. However, it's a dynamic market.
"In most developing countries, things can change very quickly," Rosson said.
Texas Farm Bureau President Kenneth Dierschke said the narrow passage of the Central American Free Trade Agreement in the U.S. House on July 31 was "a major benefit for agriculture." The measure passed 217-215 in the House, with 15 out of 202 House Democrats supporting the accord and 27 out of 232 Republicans voting against it. The measure passed in the Senate in late June.
"I understand that this was a tough vote for some of our Texas delegation in the House, because trade agreements are always tough. The current political situation made this one especially difficult," Dierschke said. "Trade has become the life's blood of agriculture."
All Republican members of the Texas delegation in the House except one voted for CAFTA, a list that includes: Joe Barton, Henry Bonilla, Kevin Brady, Michael Burgess, John Carter, Mike Conaway, John Culber-son, Tom DeLay, Louie Gohmert, Kay Granger, Ralph Hall, Jeb Hensarling, Sam Johnson, Kenny Marchant, Mike McCaul, Randy Neugebauer, Ted Poe, Pete Sessions, Lamar Smith and Mac Thornberry.
Three Texas Democrats, Solomon Ortiz, Henry Cuellar and Ruben Hinojosa, voted for passage.
"There is no doubt that the passage of CAFTA will benefit agriculture, and we appreciate those members of Congress from Texas that stood with us on this important issue," Dierschke said.
The impact of the U.S. ratification of CAFTA goes well beyond the benefits of this particular trade pact, notes Chris Garza, AFBF director of congressional relations.
"I think the rest of the world understands now that U.S. agriculture, as well as our government, is serious about international trade," Garza said.
The agreement was passed in El Salvador, Honduras and Guatemala, but still needs approval in the Dominican Republic, Nicaragua and Costa Rica.
