With the announcement that the U.S.-Columbia Free Trade Agreement will be implemented beginning May 15, it is an appropriate time to review the market changes for the U.S.-Central American-Dominican Republic Free Trade Agreement countries which have similar market issues.  The agreement is between the U.S. and El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic as separate countries.

The six countries of CAFTA-DR have 48 million people, are closer geographically to the U.S. than most other trading partners and have roughly the same amount of trade with the U.S. as Australia.  The agreements were signed in August 2004 and mostly came into force, except for Costa Rica, in 2006 and early 2007.  The Costa Rican agreement took effect on January 1, 2009.  As a single market, CAFTA-DR is the seventh largest U.S. agricultural market after South Korea.

Half of U.S. exports became duty free immediately, including high-quality cuts of beef, cotton, wheat, soybeans, some fruits and vegetables, processed food products and wine.  Other products received improved access through tariff rate quotas, but over-quota tariffs are phased out over 15-20 years.  These include beef, pork, dry beans, vegetable oil, poultry, rice, corn and dairy products.

Using calendar year 2005 as the base year, the dollar value of agricultural exports from the U.S. increased from $1.96 billion to $4.47 billion, a 128 percent increase.  Coarse grains, mostly corn, were the highest value product both years growing 185 percent from $340 million in 2005 to $970 million in 2011.  Wheat was number two increasing from $260 million to $610 million, a 135 percent increase, while soybean meal was number three at $210 million and $420 million, a 100 percent increase.  Rice rounded out the big four at $170 million in 2005 and $180 in 2012, a 6 percent increase.  Grain prices have more than doubled since 2005, so the volume increases are lower.  Coarse grain volumes were almost unchanged at 3.2 million metric tons (MMT); wheat up from 1.5 MMT to 1.8 MMT, a 20 percent increase; soybean meal up from 910,000 MT to 1.0 MMT, a 10 percent increase; and rice down from 760,000 MT to 490,000 MT, a 36 percent decline.

Substantial changes have occurred in the smaller volume and value products.  Soybean oil exports increased 93 percent in volume to 137,000 MT, while increasing almost 400 percent in value.  Red meat increased 244 percent in volume to 55,000 MT and 366 percent in value.  Dairy products increased 68 percent in volume to 42,000 MT, and 122 percent in value, and poultry meat volume increased 97 percent to 136,000 MT and 143 percent in value.  Other products were also active: processed fruits and vegetables more than doubled, snack food were up 80 percent, breakfast cereals 70 percent and fresh fruits 60 percent.

The six countries already had preferential import access to U.S. markets under the Caribbean Basin Initiative (CBI) and Most Favored Nation (MFN) preferences for developing countries.  Almost all agricultural items were entering tariff free.  The value of imports increased from $3.1 billion in 2005 to $5.7 billion in 2011, an 84 percent increase.  Bananas and plantains were the largest import items in 2005 on a dollar basis at $650 million followed by unroasted coffee at $600 million.  Those roles were reversed in 2011 with unroasted coffee at number one at $1.49 billion and bananas and plantains at $1.21 billion, together at 47 percent of imports in 2011 with volumes up about 10 percent.  Other fresh fruit was $420 million in 2005 and $1.4 billion in 2011 and up about 28 percent in volume.  Raw and processed sugar and sweeteners imports were $340 million in 2005 and $530 million in 2011.