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| Horticultural & Tropical Products Division | Return to the H&TP Home Page |
August 2004
On May 28, 2004, the United States signed the Central American Free Trade Agreement (CAFTA) with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. On August 5, the Dominican Republic and each of the Central American countries signed the Dominican Republic – Central America Free trade agreement (DR-CAFTA). This signing creates an agreement among seven nations. The agreement, which Congress must now approve and enact implementing legislation, 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 DR-CAFTA 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 DR-CAFTA replaces, nearly all agricultural exports from the DR-CAFTA countries to the United States already receive duty-free treatment. The DR-CAFTA 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
DR-CAFTA. . . U.S.
fruits and nut products faced average import tariffs of 15 percent, but in some
cases as high as 30 percent, in the six countries.
Without preferential access, U.S. fruits and nuts are at a disadvantage
to products from Argentina, Chile, and Mexico.
From 2001 through 2003, U.S. suppliers annually shipped on average 49,170
metric tons of fruit and nuts valued at $58.5 million to all 6 countries
combined, and the U.S. share of their import market was approximately 40 percent
in 2002.
In
the case of fresh apples and grapes, U.S. exporters annually shipped on average $13
million worth of fresh apples and $15.4 million worth of fresh grapes to all 6
countries combined from 2001 through 2003.
U.S. fresh apples and grapes are subject to 15 percent import tariffs in
all 5 Central American countries and a 20 percent tariff in the Dominican
Republic.
After
DR-CAFTA. . . U.S.
fruits and nuts gain preferential access to the markets of all 6 countries.
Over 70 percent of U.S. fruit and nut products are eligible for immediate
duty-free access, while another 26 percent of all fruit and nut products will
have their import tariffs phased out over the next 5 to 10 years.
In
the case of fresh apples and grapes, U.S. suppliers will gain immediate duty-free
access, allowing them to compete in these growing markets on equal terms with
suppliers from other countries.
Central
American and Dominican Exporters Secure Improved Access to U.S. Buyers
Before
DR-CAFTA. . . Fruits
and nut products from the 6 DR-CAFTA countries have, for the most part, entered
the U.S. duty-free under the provisions of the Caribbean Basin Initiative.
From 2001 through 2003, U.S. companies annually imported on average 3.4
million metric tons of fruits and nuts valued at $1.1 billion from the six
countries combined, and their share of the U.S. import market was 22 percent.
After
DR-CAFTA. . . All
6 DR-CAFTA countries lock-in duty-free access to the U.S. market for all fruit
and nut products.
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