The Monitor - US Congress passes CAFTA by 2 votes

The Monitor

US Congress passes CAFTA by 2 votes

A controversial free trade agreement between the United States and six Central American and Caribbean countries passed its final congressional hurdle late Wednesday, leaving Rio Grande Valley sugar growers unhappy, while pleasing other state agricultural producers. U.S. Rep. Rubén Hinojosa, D-Mercedes, joined 14 other Democrats who voted in favor of the Central American Free Trade Agreement, against their party line. On the other side, 27 Republicans voted against CAFTA. The deal passed 217-215. It cleared the Senate last month 54-45 and is headed to the president for his signature. The trade agreement would phase out tariffs on most U.S. textiles, consumer and industrial goods and agricultural products exported to the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua over a 15-year period. Most goods exported from those countries already have duty-free access to U.S. markets. As part of the deal, the United States will allow more sugar from the CAFTA countries to enter the U.S. market, which concerns sugar growers, who have said they will be forced to cut production and jobs because of oversupply.

In the first year of CAFTA implementation, increased sugar market access for the Central American and Caribbean countries will amount to about 1.2 percent of U.S. sugar production and about 1.1 percent of U.S. sugar consumption, according to the office of the United States Trade Representative. Those numbers will rise over 15 years to about 1.7 percent of production and 1.6 percent of consumption. The U.S. consumes about 10 million tons of sugar each year, of which U.S. growers produce about 8.5 million tons. World Trade Organization commitments call for a minimum of 1.25 million tons to be imported.

When comparing the Central American and Dominican Republic markets to Canada and Mexico, the United States’ top two trading partners "obviously the CAFTA market is not that big," Hall said. But the deal signals U.S. intensions to move forward in a global market. Even though CAFTA is a lot smaller than NAFTA, "there are pockets that are going to be disproportionately impacted," said Cynthia Brown, associate professor of economics and finance at the University of Texas – Pan American. She is also director of the university’s Center for Border Economic Studies.