The House of Representatives is about to vote on the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) (search), and the outcome shouldn’t be in doubt.
We’re talking, after all, about an agreement that would open Central America and the Dominican Republic to U.S. goods and services, make investing in America more attractive, and support better, higher-paying U.S. jobs. The Senate has approved it. Who could object?
Big Sugar, that’s who. It’s predicting dire consequences, including lost jobs and widespread unemployment, if DR-CAFTA passes. But their protectionist claims simply don’t hold water.
In Texas, for example, the sugar lobby has mounted a PR campaign claming that removing trade barriers with the Dominican Republic, Honduras, Costa Rica, El Salvador, Nicaragua and Guatemala would leave the sugar fields of Texas “barren” and throw thousands of sugar workers out of work.
But protecting sugar is not the same as protecting jobs. Already, American sugar farmers and processors enjoy prices two to three times the world average. Yet, despite those high prices, sugar farmers and processors themselves are eliminating jobs because of technological advancement, and their higher prices have wiped out still more American jobs in sugar-using industries.
“Barren” fields? DR-CAFTA would have little impact on the number of acres of cane planted or the level of refined sugar production in the United States. The agreement would allow qualifying Central American countries to export an additional 107,000 tons of sugar to the U.S. in the first year. That’s only 1.2 percent of annual U.S. sugar consumption -- equal to about a teaspoon and a half of sugar per American per week and little more than one day’s average domestic sugar production. Even after 15 years of DR-CAFTA, new sugar imports would amount to no more than 1.7 percent of domestic demand.
Dispassionate analyses by the U.S. International Trade Commission, American Farm Bureau Federation, Office of the United States Trade Representative and USDA Foreign Agricultural Service all conclude that DR-CAFTA will not damage the domestic sugar industry in any meaningful way.
And Texas hardly relies on sugar to keep its agricultural boat afloat. According to the U.S. Department of Agriculture, nearly all the cane in Texas is grown in just seven of its 254 counties and on just 166 of its 229,000 farms. It takes up all of 44,000 acres of land in a state that is more than 900 miles across and generates $52 million of the state’s $15 billion in farm earnings … or about a third of 1 percent. The American Farm Bureau Federation projects that if DR-CAFTA passes, roughly 800 acres in all of Texas would be shifted from sugar to other crops.
All this fear for something that might -- just might -- affect 800 acres. This does not a dust bowl make.
It’s hard to imagine who would end up the losers from DR-CAFTA, given the terms of the agreement and the fact that U.S. markets already are open to almost all the products involved. But the losers certainly would not be the sugar growers of Texas or any other state.
It’s far easier to see who would be the winners: the American people and the people of Central America. The agreement would bring growth, increased investment and job opportunities and better living conditions, particularly in the other signatory countries. It would enable farmers, manufacturers, retailers and service providers to become more competitive, gain market access and benefit from stronger property-rights protection. It also would assure our neighbors that we are sincerely interested in their economic well being.
And by removing barriers to markets in the Dominican Republic and Central America, the agreement would open those growing markets to U.S. goods and services, make investing in the U.S. more attractive and support better, higher-paying U.S. jobs.
Unlike the claims of the fear mongers in Texas, that is the un-sugar-coated truth.
Daniella Markheim is a senior policy analyst in the Center for International Trade and Economics at The Heritage Foundation, a Washington-based public policy research institution.