Cattle Alert: R-Calf Statement Regarding NAFTA Chapter 11

The following statement should be attributed to R-CALF USA President and Founder Leo McDonnell:

“It is unfortunate that a frank discussion of the failures of the North American Free Trade Agreement (NAFTA) will not be part of the summit tomorrow between the leaders of Canada, Mexico and the United States.

“For example, the Chapter 11 provisions of NAFTA – which grant foreign corporations and producers greater rights than U.S. citizens at special international tribunals – must be rewritten, both in NAFTA and in future trade agreements such as the Central American Free Trade Agreement (CAFTA).

“Right now, the Canadian Cattlemen for Fair Trade (CCFT) are using NAFTA’s Chapter 11 to try to place pressure on the United States’ independent judicial system by claiming they are due up to $1 billion Canadian dollars in compensation. Rather than taking steps to solve their problems with bovine spongiform encephalopathy (BSE) or “mad cow disease”, this Canadian business group is demanding to be paid for the closure of the U.S.-Canadian border to live cattle exports into the United States.

“The Canadian border remains closed because on March 2nd, U.S. District Judge Richard F. Cebull decided that there are significant health and safety dangers from BSE. In his formal opinion, Judge Cebull wrote: ‘Allowing the import of Canadian cattle into the U.S. increases the potential for human exposure to material containing the agent for BSE in this higher-risk meat. This has substantial, irreparable consequences for cattle growers and also for all consumers of beef in or from the U.S.’

“R-CALF USA believes the border should remain closed until the Canadians initiate higher safety standards and a more comprehensive testing regime to ensure public health. Why should foreign entities like CCFT be allowed to use an international tribunal of NAFTA to pressure our courts to undermine the health and safety standards of the U.S. consumers?

“Oddly enough, CCFT’s claim has been lodged against the very U.S. government that is trying to open the border to Canadian cattle and beef.

“We understand that the United States Department of Agriculture (USDA) and R-CALF USA are on opposing sides of the Canadian border issue. However, we believe a greater principle is at stake here. The U.S. government should recognize and acknowledge the separation of powers between the executive, legislative and judicial branches of our government, and stand up for the independence of the U.S. judicial system by opposing the NAFTA Chapter 11 case brought by this group of Canadian cattlemen.

“Foreign entities should not have the ability to attack U.S. standards. Trade agreements like NAFTA should be a force for progress and a force for raising health and safety standards, rather than abused as a tool to lower those standards.

“We urge President Bush to work with his foreign counterparts to correct the inadequacies of Chapter 11 in NAFTA before those who seek to manipulate the rule do real harm to U.S. citizens.

“Chapter 11 is one of the many reasons that NAFTA is a poor model for future trade agreements such as CAFTA. R-CALF USA will continue to oppose CAFTA until that agreement can be renegotiated.”

Will CAFTA help or hurt Wyo?

By JENNI DILLON
Star-Tribune staff writer Tuesday, March 22, 2005

While Bush administration officials tout the benefits of a new free trade agreement for the nation, a representative of the sugar industry says the proposed pact would hurt Wyoming sugar beet producers.

The beef industry, meanwhile, is at odds with itself over whether to support the Central American-Dominican Republic Free Trade Agreement (CAFTA), which would allow the U.S. greater imports from participating countries without tariffs and open markets in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic to U.S. exports.

CAFTA was signed by the U.S. last year and is expected to go before Congress later this spring for final authorization.

"This is a really important agreement for this administration," said Shaun Donnelly, the U.S.'s principle deputy assistant secretary of state for economic and business affairs. "It's good for the United States, and it's good for Wyoming."

Not everyone agrees. The sugar industry is concerned about clauses in the agreement that allow more sugar product imports, while environmental and labor groups also raise concerns about lax standards and the potential for abuses of both the environment and human rights.

"I think it's important for (people) to understand it isn't just a sugar thing," said Phillip Hayes, spokesman for the American Sugar Alliance. "There's tremendous opposition to CAFTA from the textile industry to labor unions to the Presbyterian Church to Catholic bishops ... and from environmental groups and national farm organizations."

Not so sweet deal

The sugar industry's opposition to CAFTA is among the more high profile debates over CAFTA. Sugar has been a protected market in the United States for years. The nation produces about 85 percent of its own sugar and imports the rest, primarily from CAFTA countries. Global trade agreements, such as NAFTA, however, require the United States to import sugar from 41 other countries, regardless of need, though, Hayes said.

"We already import a considerable amount of sugar," Hayes said.

Additional importation under CAFTA could potentially put thousands of U.S. sugar workers out of work, he said.

That's particularly important to Wyoming, where more than 400 farmers produce sugar beets and own three major sugar beet processing plants, in Lovell, Torrington and Worland.

Donnelly said sugar was purposely protected in CAFTA negotiations. It was the one product on which tariffs were not reduced in the agreement, and the amount of allowed imports was increased minimally, he said.

"It's really quite a small amount," Donnelly said. "It's something like 1 percent of U.S. consumption."

With an abundance of sugar already coming in from foreign countries and at least 20 other sugar-producing countries lining up to ask for the same market opportunities that CAFTA nations would receive, though, Hayes said the agreement sets a dangerous precedent.

"It's certainly big enough that it matters," Hayes said. "It's large enough that it's going to cost thousands of people their jobs, and the danger here is the precedent it sets. It won't take long before U.S. sugar production ceases."

Beefing up exports

Donnelly, however, said people also need to look at CAFTA's influence outside the sugar issue.

"There are huge potential growth areas," Donnelly said. "It's a clear net win, certainly for the U.S., and I would think for Wyoming."

Among the industries expected to benefit from CAFTA are meat, chemicals and services.

A fact sheet from the U.S. Department of Agriculture lists beef, wheat and barley, pork and dried beans as Wyoming industries that can expect growth from open markets in Central America.

Beef, for example, is the No. 1 agricultural export for Wyoming. At present, beef exporters face tariffs as high as 30 percent. Under CAFTA, tariffs on Prime and Choice cuts would disappear immediately, and duties on other beef products would be phased out over the next 10 years, the government fact sheet said.

Gregg Doud, chief economist for the National Cattlemen's Beef Association, said the cattle industry in general supports the trade agreement.

Central America isn't a large beef market, in part because of low family incomes, Doud said. U.S. beef exports in 2003 totaled about $3.86 billion. Only about $12.5 million of that went to Central American countries, he said. However, Doud said his preliminary assessments indicate that CAFTA could double the industry's work in Central America.

"It will give us immediate access for prime and choice beef down there, give us some nice access in resort communities and make us much more competitive," Doud said. "The best market for us eventually will be Guatemala, as their per capita income has a tremendous potential to rise."

But Les Barkhurst, a cattle rancher from Saratoga, disagrees with the NCBA assessment.

"To me, CAFTA is like NAFTA, only worse for the livestock producers or any entity that is in the act of production in the United States," said Barkhurst, who is a member of the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA), an industry group opposed to the free trade agreement.

"It's like a football game where one team plays with one set of rules and the other team plays with a completely different set of rules. And the level of trust I have with the referees is questionable," he said.

Barkhurst said he believes NCBA is wrong about the potential gains to the U.S. meat market under CAFTA, arguing that regulations make U.S. beef more expensive to produce than Central American beef and neither U.S. or Central American markets will purchase what is more expensive.

"They're spinning it, that's all there is to it," Barkhurst said. "Cattlemen are going out of business at a rate of 13,000 a year ... and we have NCBA touting what's good for us."

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