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. beef, including offals, faced
applied import tariffs of 15 to 30 percent depending on the product and country,
and the WTO permits duties as high as 79 percent. From 2001 through 2003, U.S.
suppliers annually shipped on average 4,424 metric tons (mt) valued at $10.6
million to all six countries combined, and the U.S. share of their import
markets was over 60 percent (in value terms). U.S. beef exports in 2004 were
severely impacted by BSE.
After CAFTA-DR. . . U.S.
Prime and Choice cuts of beef gain preferential access as tariffs applied to
these products are immediately eliminated (except the Dominican Republic) while
those applied to other cuts are phased-out over 15 years. Immediate duty-free
access will be provided by certain countries on other beef cuts through an
initial TRQ totaling 1,165 mt, expanding annually until duties are fully
phased-out. Tariffs on beef offal and other beef products are phased out over 5
to 10 years. As part of the agreement, all 6 CAFTA-DR countries are working
toward the recognition of the U.S. meat inspection and certification systems in
order to facilitate U.S. exports.
Costa Rica
Tariffs on Prime and Choice cuts of beef and offal are
immediately eliminated. Tariffs on other products are phased out over 15 years.
The tariff reduction schedule is back-loaded and safeguards apply.
Dominican Republic
The United States gains immediate duty-free access for
1,100 mt of Prime and Choice beef through a tariff rate quota (TRQ). During the
15-year linear phase out of the out-of-quota duty, the quota will grow by 100 mt
per year. A TRQ of 220 mt for beef trimmings is also established and grows by 10
percent annually.
El Salvador
Tariffs on Prime and Choice cuts of beef are immediately
eliminated. A TRQ of 105 mt for other beef cuts is established, expanding by 5
percent per year. Tariffs on offal are phased out over 5 years. Tariffs on other
products will be phased out over 15-years with a back-loaded reduction schedule.
Guatemala
Tariffs on Prime and Choice cuts of beef are immediately
eliminated, and tariffs on other products are phased out over 15-years. A TRQ of
1,060 mt for other beef cuts is established and expands by 6 percent annually.
Honduras
Tariffs on Prime and Choice cuts of beef are immediately
eliminated, tariffs on offal are phased out over 5 years, and tariffs on all
other products are phased out over 15 years.
Nicaragua
Tariffs on Prime and Choice cuts of beef are immediately
eliminated, and tariffs on offal are phased out over 5 years. There is a 15-year
tariff phase out on other products with a back-loaded reduction schedule and
safeguards apply.
In addition to providing market access through TRQs and
tariff reductions, CAFTA-DR countries are working toward the recognition of the
U.S. meat inspection and certification systems in order to facilitate U.S.
exports.
U.S. Consumers Benefit
Before CAFTA-DR. . .
Beef from the CAFTA-DR countries entering the United States faced an
out-of-quota tariff of 26 percent. From 2002 through 2004, U.S. companies
annually imported on average 27,364 mt valued at $66.6 million from all six
countries combined, and their share of the U.S. import market was 2 percent (in
value terms).
After CAFTA-DR. . .
Beef from all the CAFTA-DR countries gains preferential access as out-of-quota
tariffs are phased out over 15 years and then eliminated. TRQ access is
established for all countries except Guatemala, with different quantity bases in
the first year. The CAFTA-DR TRQ access will open once the existing U.S. WTO TRQ
fills.
Costa Rica
Initial TRQ of 10,536 mt, growing by 5 percent per year
Dominican Republic
Initial TRQ of 1,320 mt, growing by 10 percent per year
El Salvador
Initial TRQ of 105 mt, growing by 5 percent per year
Honduras
Initial TRQ of 525 mt, growing by 5 percent per year
Nicaragua
Initial TRQ of 10,500 mt, growing by 5 percent per year
Return to
CAFTA-DR
Commodity Fact Sheets
