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Treaties
and trade agreements aren’t normally a
state-based issue. But a trade agreement now under
consideration in Congress could have an important
positive impact on Virginia--and an even more
dramatic negative impact should it not be
approved.
The
Dominican Republic and Central American Free Trade
Agreement (CAFTA-DR), which includes the Dominican
Republic, Costa Rica, El Salvador, Guatemala,
Honduras and Nicaragua, would remove economic
barriers to the sale of American goods in those
markets, helping key Virginia economic sectors in
agriculture, textiles and technology.
Right
now, American products sold in most of these
countries pay substantial tariffs for entry into
that country. CAFTA-DR would eliminate 80 percent
of the tariffs immediately, with the remaining
tariffs phased out over 10 years. That benefit
comes at very little cost to the United States
because these countries’ exports already have
preferential treatment here in this country.
In
essence, CAFTA-DR changes the already existing
“one-way street” of duty-free exports to the
U.S. into a “two-way street” that would
provide U.S. farmers and manufacturers with the
same access.
What’s
the value of this to Virginia?
Virginia’s
apple farmers would see a 25 percent duty
eliminated immediately. Poultry farmers currently
face duties as high as 164 percent on both fresh
and frozen products, but under CAFTA-DR, duty-free
access will immediately be provided on key
exports, with other duties eliminated over time.
Beef, wheat, dairy and soybean product exporters
will see similar phase-outs, with duties on the
highest “in-demand” products eliminated first.
In all, CAFTA-DR eliminates tariffs on 50 percent
of our state’s agricultural exports immediately,
and most remaining duties within 15 years.
Virginia’s
textile manufacturers will be aided as well:
Virginia fabric mill exports to the CAFTA-DR
countries has risen from $9 million to $16 million
over the last four years, and these countries are
the third largest purchaser of U.S. textiles.
Under the agreement, garments made in the region
will be duty-free only if made with U.S. fabric
and yarn, benefiting American manufacturers.
Without the agreement, Central American garment
manufacturers are likely to move to China,
eliminating an important textile market for the
United States and Virginia.
Northern
Virginia’s technology industry is aided, too, as
CAFTA-DR requires all countries that are parties
to the agreement to eliminate information
technology tariffs and open up key Information
Technology services such as telecommunications.
For
Northern Virginia, where the tide of undocumented
aliens is rapidly becoming a primary political
issue, the CAFTA agreement has other benefits as
well. Four of the CAFTA-DR countries are among the
highest sources of undocumented immigrants to the
United States. Underemployment averages 51 percent
in the CAFTA-DR region, and millions are either
“informally employed” or without jobs at all.
Assembly plants that once thrived have moved to
China. One way to stem the tide of illegal
immigrants coming to our country looking for work
is to build economic opportunity in their home
countries. Generating jobs in CAFTA-DR nations
reduces the economic incentive to illegally
migrate to the United States.
The
CAFTA-DR agreement has much to offer Virginia--
and most other states in the nation.
Yet,
while the trade agreement has its usual opponents
in the labor and environmentalist lobbies (who
ignore the fact that labor and environmental
standards in high poverty countries improve only
when economic opportunity and income improve), the
real killer of this bill may be the Sugar lobby.
Today,
Americans pay two to three times the average world
price for sugar, largely because of
government-backed loans, quotas and tariffs on
imports from other countries. Big Sugar has fought
to keep those tariffs, so that even as trade
barriers to U.S. products in other countries are
rapidly falling, sugar tariffs and quotas keep
American sugar protected.
Yet
the CAFTA-DR agreement would increase sugar
imports by less than one percent of U.S.
consumption over a 15-year period. That amounts to
only 1˝ spoonfuls per American per week--or less
than many people put in a single cup of coffee.
But it’s enough for the sugar lobby to work
overtime killing the bill.
For
Virginia’s congressional delegation, the choice
should be clear: Protect Big Sugar’s prices (to
the detriment of Virginia’s consumers), or
provide greater opportunity to Virginia’s own
industries while creating disincentives to illegal
immigration.
--
May 23, 2005
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