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
U.S. Gains Improved Access to the Dominican and Central American Dynamic
Before CAFTA-DR. . .
U.S. dog and
cat food face import tariffs of 15 percent in all 5 Central American countries
and a 20 percent duty in the Dominican Republic. The WTO permits tariffs as high
as 60 percent. Without preferential access, U.S. dog and cat food is at a
disadvantage to products from Mexico, Canada, and the European Union. From 2002
through 2004, U.S. suppliers annually shipped on average 15,500 metric tons (mt)
valued at $9.3 million to all six countries combined, and the U.S. share of the
CAFTA-DR import market was 63 percent.
After CAFTA-DR. . .
U.S. dog and cat food gains preferential access
as El Salvador and Guatemala immediately eliminate tariffs, while the other
Central American countries eliminate duties over 5 to 15 years. The Dominican
Republic will immediately eliminate the tariff for canned pet food, while
tariffs will be eliminated over 10 years for dry pet food.
U.S. Consumers Benefit
Before CAFTA-DR. . .
Dog and cat food are permitted to enter the United States
duty-free from all six countries. Currently, only Costa Rica exports dog and cat
food to the United States.
From 2002 through 2004, U.S. annual imports from Costa
Rica averaged 62 metric tons valued at $42,000, and its share of the U.S. import
market was under 1 percent.
After CAFTA-DR. . . Dog
and cat food from all six countries gain preferential access as U.S. import
tariffs are immediately locked in at zero.