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CAFTA outlook clouded by NAFTA's failure for farmers |
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Promoters of the
proposed Dominican Republic/Central American Free Trade
Agreement (CAFTA) have asserted that it will provide significant
benefits to the agricultural sector. Similar promises were made
in the debate over the North American Free Trade Agreement in
1992 and 1993. Unfortunately, the results never lived up to the
promises.
U.S. trade and agricultural officials predicted that NAFTA would expand farm production and jobs in the United States But a truly accurate measure of the overall effects of trade on the economy requires taking into account both imports and exports. If officials' predictions had been accurate, the U.S. trade balance should have improved since 1993, the year before NAFTA took effect. The figure below compares U.S. trade balances in agricultural and food products with those of Canada and Mexico in 1993 and 2004. Mexico stands out because there is simply no significant change in the trade balance in either agricultural or food products. Although two-way trade with Mexico has expanded, it has not provided a net stimulus of any kind to either sector.
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