On August 5, 2004, the United States signed the Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) with
Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
The agreement will provide America’s farmers, ranchers, food processors, and the
businesses they support with improved, and in many cases, new access to this
growing regional market of 44 million consumers. The CAFTA-DR calls for eventual
duty-free, quota-free access on essentially all products, and addresses other
trade measures among the parties as well. Under the existing terms of the
Caribbean Basin Initiative, which the CAFTA-DR replaces, nearly all agricultural
exports from the CAFTA-DR countries to the United States already receive duty
free treatment. The CAFTA-DR levels the playing field, providing U.S. exporters
market access that is better than, or at a minimum equal to, that given to other
competitor countries.
U.S. Gains Improved Access to the Dominican and Central American Dynamic
Economies
Before CAFTA-DR. . .
U.S. pork,
including offals, faced applied import tariffs of 15 to 47 percent depending on
the product and country, and the WTO permits tariffs as high as 60 percent. From
2002 through 2004, U.S. suppliers annually shipped on average 11,770 metric tons
(mt) valued at $20.5 million to all six countries combined, and the U.S. share
of their import markets was 75 percent (in value terms).
After CAFTA-DR. . . The
United States gains preferential access for pork as tariffs are reduced to
complete elimination over 15 years. Tariffs on bacon and some offal products
will be eliminated immediately. Duty-free in-quota tariff rate quotas (TRQs)
amounting to 13,613 mt are established in the first year and will grow 5 to 15
percent a year, depending on the country. As part of the agreement, all six
CAFTA-DR countries are working toward recognition of the U.S. meat inspection
and certification systems, which would replace the existing policy of
plant-by-plant inspections and approval.
Costa Rica
Tariffs on bacon and most offal products are eliminated
immediately, while remaining tariffs on other pork products are phased out over
a 15-year period. U.S. producers gain duty-free in-quota access in the form of a
TRQ that starts with a base of 1,100 mt and grows 10 percent in the first 5
years, 12 percent in the next 5 years, and 15 percent in the last 4 years. The
out-of-quota tariff shall remain at base rates for the first 6 years and is then
reduced in equal annual increments over the final 9 years. Safeguards are
available during the tariff phase-out period.
Dominican Republic
Tariffs on most pork and pork products will be eliminated
over 15 years with safeguards available on some products during the phase out
period. U.S. producers gain duty-free in-quota access in the form of a TRQ that
starts with a base of 3,465 mt and grows 10 percent annually. Additionally, TRQs
for bacon and fat will be established at quantities of 220 and 550 mt
respectively.
El Salvador
Tariffs on bacon and most offal products are eliminated
immediately, while remaining tariffs on other pork products are phased out over
a 15-year period. U.S. producers gain duty-free in-quota access in the form of a
TRQ that starts with a base of 1,650 mt and grows 10 percent annually. The
out-of-quota tariffs shall remain at base rates for the first 6 years and then
reduced by 40 percent over the next 5 years, and completely eliminated over the
last 4 years. Safeguards are available during the tariff phase-out period.
Guatemala
Tariffs on bacon and offal products are eliminated
immediately, while remaining tariffs on other pork products are phased out over
a 15-year period. A duty-free TRQ will be provided for U.S. exports of pork with
a base of 4,148 mt growing at 5 percent annually. Safeguards are available
during the tariff phase-out period.
Honduras
Tariffs on bacon and some offal products are eliminated
immediately, while remaining tariffs on other pork products are phased out over
a 15-year period. U.S. pork producers receive access to TRQ with a base of 2,150
mt that grows by 7.5 percent annually. The out-of-quota tariff shall remain at
base rates for the first 6 years and is then reduced by 40 percent over the next
5 years, and completely eliminated over the last 4 years. Safeguards are
available during the tariff phase-out period.
Nicaragua
Tariffs on bacon and offal products are eliminated
immediately, while remaining tariffs on other pork products are phased out over
a 15-year period. U.S. producers gain a duty-free TRQ starting with a base of
1,100 mt and growing at 10 percent annually. Safeguards are available during the
tariff phase-out period.
U.S. Consumers Benefit
Before CAFTA-DR. . .
Pork imports from the CAFTA-DR countries are not
subject to import duties in the United States as a result of benefits granted
under the Caribbean Basin Initiative. However, pork from all six CAFTA-DR countries is prohibited from entering the U.S. market since the
countries have not yet met USDA sanitary and phytosanitary (SPS) requirements in
their meat inspection systems.
After CAFTA-DR. .
All six CAFTA-DR countries lock-in duty free access for pork to the U.S. market.
Imports are permitted once all outstanding SPS and technical issues affecting
bilateral trade are adequately addressed through ongoing consultations.
