Pact Seen as Threat to Latin Farmers

Central American farmers may be plowed under by heavily subsidized U.S. farm products if Congress next year approves the Central American Free Trade Agreement, according to a report to be released today.

The anti-poverty organization Oxfam International predicted that the region’s rice industry would be decimated, jeopardizing 1.5 million jobs. That would weaken Central America’s already struggling farm sector and fuel continued migration to the United States, Oxfam said.

California rice growers, however, could benefit indirectly from the proposed accord.

CAFTA, signed last year but not yet ratified, would liberalize trade among the United States and five nations -- Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua -- and potentially the Dominican Republic. The agreement would cover markets such as textiles and communications, but much of the contention is focused on agriculture.

Oxfam said small Central American farmers wouldn’t stand a chance against U.S. rice growers, who received subsidies and supports that it estimated at nearly $1.3 billion last year.

Stephanie Weinberg, Oxfam’s trade policy advisor in Washington, pointed to a surge of low-cost U.S. agricultural exports to Mexico after passage of the North American Free Trade Agreement. That, along with the subsequent exodus of tens of thousands of small Mexican farmers from the countryside, is a sign of things to come under CAFTA, she said.

“NAFTA is a prime example of what happens to small-scale farmers,” Weinberg said. “We think the same thing is going to happen in Central America.”

The stakes are high for California, which could be the destination for many of the farm families potentially displaced by CAFTA. The state’s rice growers stand to win, albeit indirectly, if the accord is ratified.

California is the nation’s second-largest rice producer, and its 2,500 growers rely heavily on exports. Most of those sales are to Asian markets. Central Americans prefer the long-grain rice produced in the Southern United States, not the sticky short- and medium-grain varieties grown in California.

Tim Johnson, president of the California Rice Commission, said Central Americans were unlikely to buy California rice even if CAFTA was approved and stiff tariffs were dropped, resulting in lower prices.

But the state’s growers could see higher domestic sales if more rice from places such as Louisiana and Mississippi ended up on Central American tables, instead of competing with California rice for use in the U.S. food processing industry.

“We support any trade agreements that benefit American rice farmers,” Johnson said. “CAFTA is important for the U.S. rice industry.”

Not all U.S. businesses share his enthusiasm. American sugar farmers fear increased foreign competition and vow to lobby hard against CAFTA. Ditto for beleaguered textile makers. They say the agreement is full of loopholes that would allow garments stitched in Central America, with fabric from places such as China, to enter the United States duty-free.

Labor advocates also are promising a tough fight. Rep. Sander M. Levin (D-Mich.), a member of the House Ways and Means Committee, said CAFTA lacked enforceable standards on basics such as the prevention of child labor and the rights of workers to organize unions.

Levin, a backer of numerous trade agreements, said he and others were ready to draw a line in the sand on CAFTA.

“It’s a bad deal all around,” Levin said.

Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute, a libertarian think tank in Washington, said the agreement was needed to shore up troubled economies of Central American countries that were fighting civil wars as recently as the 1980s.

“This was a tortured region 20 years ago,” Griswold said. “If the U.S. Congress says no to CAFTA, it would send a message to the countries that we only care about you if you are a problem. I think that would be bad economic policy and terrible foreign policy.”

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U.S. rice export markets

Top 10 export markets for U.S. rice, by value, in 2003 (in millions)

Mexico: $140.40

Japan: $113.30

Central America: $90.50

Haiti: $89.30

Middle East: $84.30

Canada: $77.20

European Union: $72.00

Philippines: $36.80

Taiwan: $33.90

South Korea: $27.10

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Source: USA Rice Federation