	Most Recent Developments

On December 30, 2005, the Office of the U.S. Trade Representative (USTR) announced thatthe United States will implement the Dominican Republic-Central American Free Trade Agreement(DR-CAFTA) "on a rolling basis as countries make sufficient progress" in completing theircommitments under the agreement. a. Negotiating Objectives for Agriculture

U.S. objectives in negotiating DR-CAFTA's agricultural provisions were to (1) eliminateCentral American and Dominican Republic tariffs, quotas, and non-tariff barriers to trade, (2)provide adequate transition periods and relief mechanisms for the U.S. agricultural sector to adjustto increased imports of sensitive products from the region, (3) eliminate any unjustified sanitary andphytosanitary (SPS) restrictions imposed by the six countries and seek their affirmation of theirWorld Trade Organization (WTO) commitments on SPS measures, and (4) develop a mechanismwith its FTA partners to support the U.S. objective to eliminate all agricultural export subsidies inthe WTO and Free Trade Area of the Americas (FTAA) negotiations. DR-CAFTA's Main Agricultural Provisions

In the agreement, the United States and the six countries agreed to completely phase outtariffs and quotas -- the primary means of border protection -- on all but four agriculturalcommodities and food products in seven stages either immediately or over 5, 10, 12, 15, 18, or 20years. The four most sensitive commodities -- fresh potatoes and fresh onions imported by CostaRica, white corn imported by the other four Central American countries, and sugar entering the U.S.market -- will be treated uniquely. Safeguardswill serve to protect agricultural producers from sudden surges in imports, triggered when quantitiesincrease above specified levels. Each countrynegotiated its own list of agricultural products eligible for safeguard protection. Once quotas are fullyphased out, U.S. grain exports are expected to increase substantially. NA - Not applicable

	U.S. Agriculture and Food Sectors' Views on DR-CAFTA's Agricultural Provisions

Most U.S. commodity organizations, agribusiness and food firms, and theAmerican Farm Bureau Federation (a general farm organization) supported this tradeagreement, expecting their producer-members and exporters to benefit from theincreased access guaranteed to the Central American and Dominican Republicmarkets. One trade organization representing cattlemen with concerns about freetrade agreements in general opposed DR-CAFTA's beef provisions. The NationalFarmers Union (a general farm organization) opposed the agreement. Costa Rica would eliminate its tariff on U.S. white corn over 15 years;the Dominican Republic will continue current duty-free treatment. Dairy Products. The ITC report, according to the ASA, did not take into account the U.S.commitment under NAFTA to allow free access to sugar imports from Mexicostarting in 2008 and potential obligations to open the U.S. sugar market to importsfrom other sugar-exporting countries with which the United States is negotiating freetrade agreements. The SweetenerUsers Association responded that the ITC's projections "appear to be overstated" -- by not considering the additional demand for sugar created by U.S. populationgrowth over time and USDA's authority to limit the amount of domestic sugar thatcan be marketed to ensure that no change in domestic prices occurs. The U.S. sugar industry rejected theAdministration's "repackaged, short-term offer," stating that it did not address theirlong term concerns about (1) sugar that could enter in future trade agreements, (2) itsobjectives for a resolution of the dispute on Mexico sugar access to the U.S. market,and (3) the continuation of the features of the current sugar program after FY2008. A spokesman for the ASA vowed to work to defeat DR-CAFTA. In its analysis of the DR-CAFTA implementation bill ( H.R. (30) 
Beef. To date, the legislatures of the DominicanRepublic, El Salvador, Guatemala, Honduras and Nicaragua have approved the tradeagreement.
On August 2, 2005, President Bush signed into law the bill to implement the DominicanRepublic-Central American Free Trade Agreement, or DR-CAFTA ( P.L. 109-53 , H.R. 3045 ). Drawing much attention during congressional debate were the agreement's sugar provisionsto allow additional sugar from the region to enter the U.S. market. To assuage concerns expressedby some Members, the Administration pledged prior to Senate passage to take steps to ensure thatall sugar imports, including those under DR-CAFTA, do not exceed a "trigger" that could underminethe U.S. Department of Agriculture's ability to manage the domestic sugar program. Sugar producersand processors responded that USDA's pledge did not address their long-term concerns, andcontinued last-minute efforts to defeat the agreement.
In DR-CAFTA, the United States and six countries will completely phase out tariffs andquotas -- the primary means of border protection -- on all but four agricultural commodities tradedbetween them in stages up to 20 years. The four exempted products are as follows: for the UnitedStates, sugar; for Costa Rica, fresh onions and fresh potatoes; and for the four other CentralAmerican countries, white corn. The Dominican Republic, El Salvador, Guatemala, Honduras, andNicaragua have approved the agreement; Costa Rica's legislature is currently considering it. As ittakes effect on a rolling basis, the U.S. agricultural sector will over time gain free access to the sixhighly protected markets on a reciprocal basis, matching these countries' current duty-free entry fornearly all their agricultural exports to the United States. Other provisions establish safeguards forspecified agricultural products to protect U.S. and the region's producers from sudden import surges;prohibit the use of export subsidies between partners; and establish a mechanism to address sanitaryand phytosanitary barriers to agricultural trade.
DR-CAFTA's provisions, once fully implemented, are expected to result in trade gains,though small, for the U.S. agricultural sector. The U.S. International Trade Commission (ITC)estimates that $328 million in additional exports (primarily grains, meat products, and processedfood products) would be offset by a $52 million increase in imports (largely reflecting additionalaccess granted for sugar and beef from the six countries). Of the $2.7 billion increase in total U.S.exports that the ITC projects under DR-CAFTA, 12% would be attributable to the U.S. agriculturalsector.
Most U.S. commodity groups, agribusiness and food manufacturing firms, and the AmericanFarm Bureau Federation (a general farm organization) supported DR-CAFTA, expecting to benefitfrom the guaranteed increased access to these six markets. Cotton producers announced theirsupport only after one major textile trade association came out in favor of it. The U.S. sugar industrystrongly opposed the additional access for sugar imports from these countries, fearing its economicimpact on domestic producers and processors. Two cattlemen trade organizations held differingpositions on the agreement's beef provisions. The National Farmers Union (a general farmorganization) opposed DR-CAFTA. Congress is expected to monitor developments on DR-CAFTAimplementation during the second session of the 109th Congress. This report will be updated.