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Passage of CAFTA Means Stronger Exports for Illinois Farmers

Posted on: Friday, 29 July 2005, 00:00 CDT

Jul. 29--Illinois farmers will see stronger exports because of the Central American Free Trade Agreement, agricultural observers said Thursday.

"Illinois is a leading export state so this trade agreement is essential to the livelihood of our corn farmers," said Roger Sy, president of the Illinois Corn Growers Association. "We will be a major beneficiary of this legislation."

The CAFTA trade agreement was narrowly approved by the House of Representatives early Thursday morning. The approved the trade bill last month and is soon expected to be signed into law by President Bush.

The agreement ends most tariffs on approximately $33 billion in goods traded between the U.S. and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. Agriculture exports from the U.S. are expected to jump by $900 million in the first year of the agreement.

Illinois farmers are well positioned to market their products to Central America because the bulk of the state's food exports already pass through ports on the Gulf of Mexico.

The corn grower's association estimates corn exports will jump by 40 million bushels a year, out of a total Illinois crop that sometimes totals 800 million bushels.

The Illinois Soybean Association is also enthusiastic about CAFTA.

Rebecca Richardson, director of operations for the association, said U.S. soybeans and soybean meal and oil have been largely blocked by the CAFTA nations. Those countries have tended to buy soybeans from Brazil or elsewhere in South America.

"We export a large amount of our soybeans all around the world," Richardson said. "But we don't compete in Central America."

She said she expects that situation to change.

Illinois is by far the largest grower of soybeans, with average harvests of 374 million bushels worth $2.75 billion. About half of the crop is exported.

CAFTA was opposed by labor unions and others who fear that it will export jobs. It was likened to the North American Free Trade Agreement with Canada and Mexico, which organized labor says has cost the U.S. more than a million jobs.

But if CAFTA is anything like NAFTA, it will significantly increase both exports and imports. Trade between Mexico and the U.S. more than tripled after NAFTA was adopted.

The upper Midwest dairy industry also expects to benefit from free trade with Central America.

"CAFTA is an emerging market for dairy products," said Connie Tipton, president of the International Dairy Foods Association.

Under the agreement, duties on many dairy products will be reduced in the first year and fully eliminated within 20 years.

The U.S. won immediate and duty-free access for whey and lactose. After 20 years, duties and quotas on cheese will disappear.

The dairy industry joined with an advocacy group called the Council for Citizens Against Government Waste in praising a provision which allows the U.S. to import a small amount of sugar from CAFTA producers.

Sugar interests in the U.S. fought any relaxation of the rules against sugar imports, which keep the price here higher than elsewhere in the world.

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Source: Chicago Tribune

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