Secretary Mike Johanns hosts Ask the White House

Mike Johanns
Hi, I'm Mike Johanns, the Secretary of Agriculture. I spoke earlier today to the Western Governor's Association about the Central American-Dominican Republic Free Trade Agreement, which we often call CAFTA-DR.

For American agriculture to be successful in the future we need to pass this agreement. America's farmers and ranchers derive 27% of their income from exports, as 96% of the world's consumers live outside of the United States. Each year, our agriculture productivity increases by two percent, while our consumption increases by only one percent. So you can see we must expand our export markets to have continued prosperity in the agricultural economy.

I'm happy to take any questions about CAFTA-DR or any other agriculture issue you wish to discuss.

Brian, from California writes:
Mike,Although the Mexican economy had benefitted significantly from the NAFTA agreement, the gap between the prosporous North and relatively empoverished South of the nation continues to grow. Do you expect entirely positive economic results from the CAFTA agreement in the nations involved?

Mike Johanns
Thanks for the question, Brian. Mexico has benefited significantly from NAFTA through increased exports, higher wages for Mexican workers, less poverty, more foreign investment and a much stronger agriculture sector. In fact, Mexican agricultural exports to the U.S. have doubled under NAFTA, at the same time that U.S. agricultural exports to Mexico have doubled. This serves as a great example of how free trade agreements work to level the playing field and make trade a two way street.

I fully expect CAFTA to result in the same economic benefits. CAFTA levels the playing field for U.S. workers and farmers by opening the region’s markets to goods, services, and farm products from the United States. It’s a win-win agreement for both sides and a great opportunity to promote growth, opportunity and democracy in the Western Hemisphere.

Phuong, from Maryland writes:
Secretary Johanns, I am a Vietnamese American. In support of our freedom

and economic liberty for everyone, especially as we build freedom and peace in our backyard, I support CAFTA as the President has called for. What can you do to ensure that the United States truly has a fair free trade with these neighboring countries in terms of goods, materials and labor? Thank you.

Mike Johanns
You raise a good point, Phuong. In order to truly promote freedom, democracy and prosperity in any trade agreement, trade must be considered “fair,” as well as “free.” President Bush has gone to great lengths to emphasize the importance of free and fair trade. We have lived up to this commitment in previous trade agreements with Chile, Singapore and Australia. Each of these agreements has already begun to produce benefits for American workers, farmers, ranchers and service providers.

CAFTA-DR goes beyond previous free trade agreements in addressing worker rights issues by developing a labor strategy that helps ensure that Central America’s labor laws in are in-line with those of the International Labor Organization. Additional provisions within CAFTA-DR are aimed at effective enforcement of environmental laws. In addition to promoting the economic benefits of free trade, our U.S. negotiators recognized the need to provide strong protections for labor and the environment.

Eldon, from Utah writes:
I read that Under CAFTA, barriers to agricultural imports from our "trading partners" would be removed immediately, while barriers to U.S. exports wouldn't be lifted for anywhere from 10-20 years thereby crippling U.S. agricultural producers. Is this accurate? When would trade barriers actually be lifted for the various countries involved in CAFTA?

Mike Johanns
Thanks, Eldon, I appreciate the opportunity to help clarify this important point. Today, under previous trade agreements, over 99-percent of the CAFTA-DR nations’ agricultural exports already enter the U.S. duty-free. There are essentially no barriers to Central American countries exporting agricultural products to the United States. But U.S. farmers and ranchers do not have the same access to the CAFTA-DR markets.

Currently, CAFTA-DR countries are allowed to charge very high tariffs. The current WTO levels are, on average, 42-percent in Costa Rica, 41-percent in El Salvador, 40-percent in the Dominican Republic, 49-percent in Guatemala, 35-percent in Honduras, and 60-percent in Nicaragua.

What CAFTA-DR does is level the playing field for U.S. agriculture producers by knocking down these tariffs on U.S. agriculture exports. Many of these tariffs would be eliminated immediately while others would be phased out over the next ten years. If we did not pass CAFTA, our farmers and ranchers will remain at a competitive disadvantage in these important markets.

Jared, from Grand Rapids writes:
I am a 14-year-old very interested in Polotics, and I have not Heard of CAFTA. Could you define it? And What is it supposed to help?

Mike Johanns
Hi, Jared, thanks for the question. I am always encouraged to hear from a student who is interested in our nation’s political process. The Central American-Dominican Republic Free Trade Agreement, also known as CAFTA-DR, is a bilateral trade agreement between the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

To put it in a nutshell, CAFTA-DR was negotiated to eliminate tariffs and trade barriers and to expand regional opportunities for the workers, manufacturers, consumers, farmers, ranchers and service providers of all the countries. This agreement will also strengthen the ties between the U.S. and the emerging democracies of Central America.

Cliff, from Brimfield, Ohio writes:
Secretary Johanns: How does CAFTA effect the Agriculture area? Job's, production etc Thank You

Mike Johanns
Greetings, Ohio. I have briefly touched on the broader economic benefits of CAFTA to agriculture, but let me give you some numbers to specify the opportunities for our nation’s producers.

The American Farm Bureau Federation estimates that CAFTA-DR could boost U.S. agricultural exports by $1.5 billion when fully implemented. Central America and the Dominican Republic consist of more 44 million people and represent a substantial market for U.S. food and fiber exports.

Nearly every major U.S. agricultural sector will benefit from expanded market access under CAFTA-DR, with gains in such sectors as feed grains, wheat, rice, soybeans, poultry, pork, beef, dairy, fruits and vegetables, and processed products. CAFTA-DR would create incentives for factories to stay in Central America and use American materials rather than relocate to Asia where they are more likely to use Asian materials. As you can see, CAFTA-DR is essential to promoting opportunities for American agriculture and to maintaining a workforce dependent upon agricultural products.

Mike Johanns
Yes, this is truly my dream job to serve as Secretary of Agriculture. As someone who grew up on a dairy farm in Iowa, I know the importance of agriculture and USDA touches people’s lives every day. When President Lincoln created the Department of Agriculture, he called it “The People’s Department.” What a privilege it is for me to serve as the Secretary of “The People’s Department.”

Part of my job is to have a vision for the future of agriculture and that vision must include a global view, which is why I am so passionate about our trade agenda. America’s farmers and ranchers are among the best in the world. But they need a level playing field in order to compete. There are huge new markets out there, waiting to be tapped, if only we are willing to keep our farmers and ranchers competitive in an increasingly global economy and not withdraw from it.

Mary, from Chicago writes:
Is CAFTA necessary? I mean we have NAFTA and FTAA.. what benefits do we have? Thank you, Mr. Johann

Mike Johanns
The CAFTA-DR agreement is necessary. It is a separate agreement from the NAFTA, which included Mexico, the United States and Canada and the FTAA is still under negotiation. The CAFTA-DR countries have for many years enjoyed duty free access to the U.S. market for nearly all of their products under the Caribbean Basin Initiative.

Simply put, this agreement will level the playing field for U.S. agricultural products by turning a “one-way” street for trade into a “two-way” street. U.S. farm product sales to CAFTA-DR countries were $1.8 billion in 2004, and the American Farm Bureau estimates this number could nearly double with full implementation of the Agreement.

Kirk, from Milwaukee, WI writes:
Mr. Secretary: What types of safeguards does CAFTA provide for our farmers, especially those whom grow sugar?

Mike Johanns
Thanks for the question, Kirk. This is a very important and very delicate issue. Sugar is probably one of the most sensitive and most misunderstood provisions within the CAFTA-DR agreement.

As the former governor a sugar producing state, I represented sugar beet growers in the western part of the Nebraska for six years. I am very conscious of their concerns. But, based on the facts of the agreement, I can tell you that sugar was treated with the utmost care. Approval of CAFTA would not have a destabilizing effect on the U.S. sugar program. In fact, the increased sugar market access under CAFTA-DR amounts to only a small portion of U.S. production—little more than one day’s production in the United States.

Regarding your question about safeguards for sugar producers, the President’s trade negotiator included a mechanism in the Agreement that would allow the U.S. to provide compensation to the Central American countries in the event that the U.S. sugar program is threatened under CAFTA. More information on how carefully sugar was treated in this Agreement can be found on the USTR website at www.ustr.gov.

George, from Sheridan, WY writes:
Dear Mr. Johanns, What will be the effect of CAFTA on agricultural trade? Which products will we be importing from Latin American countries and which will we be exporting? Will the farmers active in products which will be imported be compensated? Will they get time to adapt to other products? And finally, is there still a plan in the Bush administration for a free trade area for the whole continent?

Mike Johanns
Central America and the Dominican Republic are already strong export markets for U.S. agriculture and currently make-up the 2nd largest export region in Latin America, behind only Mexico.

In 2004, U.S. exports of food and agriculture products totaled $1.8 billion. Some estimates are that U.S. agricultural exports to the region as a result of the CAFTA-DR could nearly double, as barriers to trade are eliminated and economies in the region strengthen as a result of this agreement.

We do not expect a significant increase in imports from Central America or the Dominican Republic, as currently 99 percent of their ag products already enter the United States duty-free.

In terms of U.S. exports, nearly every major sector will benefit from expanded access under this agreement, with gains in such sectors as feed grains, wheat, rice, soybeans, poultry, pork, beef, dairy, fruits, vegetables and processed products.

Mike Johanns
These have been great questions about a very important trade agreement. CAFTA-DR represents an important opportunity for America.s farmers and ranchers. One that we cannot let slip away because for every market we shun, there will be a number of our economic competitors only to eager to make an agreement of their own that will leave America's farmers and ranchers behind.