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REPORTS: FREE TRADE |
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Saturday
20 December 2003
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Growers watch CAFTA
Proposed Central American Free Trade
Agreement still has opposition
Costa Rica rejected it. U.S. labor
unions and manufacturers are lining up
against it, and it faces a tough
ratification battle in Congress.
But if it comes to fruition in its
current form, the proposed Central
American Free Trade Agreement -- terms
of which were reached this week by the
Bush Administration and four countries
in that region -- could bring benefits
for Coachella Valley agricultural
growers.
Those would include elimination of
export tariffs and the creation of
potential new Central American markets
for locally grown products.
"It’s not a market we’ve actively
pursued in the past, but that doesn’t
mean we won’t in the future," said
Suzanne Powell, senior vice president of
marketing and business development for
Peter Rabbit Farms in Coachella.
Among its numerous provisions, CAFTA
calls for the current 15 percent tariffs
on fresh California grapes exported to
El Salvador, Guatemala, Honduras and
Nicaragua to be eliminated immediately
once the pact is ratified.
Table grapes are the Coachella Valley’s
top cash crop, generating one-fourth of
the region’s total $425.6 million in
2002 agricultural sales.
Exact figures are not available, but
exports to Central America account for
only a small fraction of valley
agribusiness.
Powell noted that the valley’s short
grape harvest season -- late April to
early July -- demands that most of the
crop be sold domestically.
Powell said CAFTA would likely have the
most immediate impact on growers who
already market their products globally.
Among those is Sun World International,
a Bakersfield-based fresh-produce
marketer with packing operations in
Coachella. Sun World chief executive
Timothy Shaheen said the company makes a
small portion of its grape shipments to
Guatemala, but it’s too soon to gauge
what overall impact CAFTA would have on
the company’s business.
"Anytime you can knock down tariffs of
any kind, it’s good for us," Shaheen
said. "But right now Central America is
a pretty limited market for us."
Shaheen added that it is premature to
count up potential benefits, since
CAFTA’s ratification is far from a sure
thing.
"I expect there’s going to be a good
amount of fighting over this," he said.
Local growers have long noted that the
North American Free Trade Agreement,
upon which CAFTA is partially modeled,
has not resulted in major valley sales
gains since it took effect in 1994. In
fact, the valley faces increasing
competition for its products from
Mexican growers.
Growers in the valley and elsewhere in
California are also contending with
lower-priced goods from South American
countries like Chile and Argentina,
which are not covered by existing trade
agreements.
Nevertheless, this week’s CAFTA
announcement was hailed by the
Fresno-based California Table Grape
Commission.
"We’ve been working closely with the
U.S. trade representative and the
Department of Agriculture on this
issue," said commission president
Kathleen Nave. "We are pleased to have
the grape tariff elimination included in
the agreement and urge Congress to
ratify the agreement."
The commission reported that California
exports to the four Central American
countries totaled more than $8 million
last year and are on track to increase
for 2003. Total fresh grape exports by
state growers were nearly $400 million
last year, and Nave said the tariff
elimination would lead to increased
exports and more dollars coming to
California.
"California provides the ideal
conditions for growing fresh produce,
and produce exports have become an
important part of the state’s economy,"
Nave said.
The Table Grape Commission is the
research and promotional arm of the
state’s fresh grape industry. It
represents more than 600 farmers,
including about 60 in the Coachella
Valley. In 2002, five varieties of
grapes accounted for more than $103.8
million in total sales by valley
growers.
On Friday, the Washington, D.C.-based
National Farmers Union criticized CAFTA,
contending it will adversely impact
domestic producers of sugar, fruit,
vegetable, dairy and other commodities.
NFU President Dave Frederickson said the
pact does not sufficiently address labor
and environmental standards, and will do
little to reverse the U.S. agricultural
trade deficit of $300 million with the
four CAFTA countries.
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