For what it's worth
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CAFTA Ratification Would Expand U.S. Red Meat Access In Costa Rica
The Central America Free Trade Agreement (CAFTA)
has increased access and decreased tariffs for
U.S. products in several Central American
countries. In Costa Rica, however, there has been
debate whether implementing CAFTA is in the best
interest of local producers and businesses.
Some Costa Ricans fear providing duty-free access
to large U.S. companies will run local owners out
of business. So, the ratification and
implementation of CAFTA in Costa Rica will be up
to voters to decide on Oct. 7 in a referendum election.
U.S. Meat Export Federation (USMEF) Director,
Central & South America and Global Strategic
Coordination Ricardo Vernazza-Paganini expects
CAFTA to be ratified, which would increase access
for U.S. beef and pork products to this growing market.
For beef, all U.S. inspected plants will be
approved to export Costa Rica, replacing the
current system of plant inspections done by
veterinarians from Costa Rica. Under CAFTA, U.S.
beef muscle meat graded as prime or choice will
have duty free access, replacing the current 18 percent duty.
“The beef muscle market is waiting to be
developed,†said Vernazza-Paganini. “The economy
in Costa Rica is growing and there are many
expatriates living there who are loyal to U.S.
products. Plus, many consumers are simply not
aware of U.S. beef’s high quality.â€
Costa Rica produces more beef than it consumes,
but its beef is from the Cebu breed of cattle
slaughtered at more than 30 months of age, which
produces a tougher product. U.S. beef has an
advantage since it is grain fed and comes from younger cattle.
“This is an area where USMEF educational efforts
will inform consumers of the superior advantages
of U.S. beef,†said Vernazza-Paganini. “Through
marketing campaigns and complimentary beef
samples, we want consumers to recognize U.S.
beef’s difference so they can make informed purchasing decisions.â€
The beef variety meat import market in Costa Rica
is approximately 1,000 metric tons (mt) per year
and Nicaragua currently has nearly 40 percent of
the import market share. With U.S. beef variety
meat entering Costa Rica duty free under CAFTA,
the United States will have a good opportunity to
displace Nicaragua as a main supplier of variety
meat due to price competitiveness.
A sizable amount of pork imported by Costa Rica
is for processing. Under CAFTA, the United States
will have a 1,100 mt tariff-rate quota, which is
similar to the total annual amount Costa Rica has
imported in each of the last three years.
Currently, Canada has 85 percent of the import
market share for chilled/frozen pork destined for
processing in Costa Rica since it has a 33
percent duty compared to higher duties applied to
competing products. U.S. pork products currently
have a 45 percent duty. However, under CAFTA, the
United States will have duty-free access up to
1,100 mt, giving it a 33 percent price advantage over Canada.
“Under CAFTA, the Costa Rica market for beef and
pork will expand, but that expansion will be
gradual since domestic production is strong,â€
said Vernazza-Paganini. “Our goal is to use the
market access to our advantage and to increase
consumer awareness of the quality attributes of U.S. red meat products.â€
But from now until the referendum election, USMEF
is in a holding pattern to see whether CAFTA will be implemented in Costa Rica.
“If 40 percent of the electorate votes in the
referendum election, then the result will be
binding,†said Katherine Nishiura, agricultural
counselor for Costa Rica, Nicaragua and Panama.
“If less than 40 percent of eligible voters turn
out, then the National Assembly will ratify the agreement legislatively.â€
Vernazza-Paganini said USMEF is using this time
to conduct research to identify the best possible
marketing strategies, to connect with meat buyers
and importers who are apt to purchase U.S. red
meat products and to develop good relationships
with the Costa Rican agriculture industry to
affirm the United States does not intend to
supplant their industries and production.
“Even if 40 percent of voters say ‘si’ (yes) to
CAFTA, Costa Rica still has a lot of work to do,â€
said Nishiura. “Thirteen pieces of legislation
required to implement CAFTA provisions have to be
passed by the National Assembly and entered into law by the deadline date.â€
The CAFTA ratification deadline is two years
after the initial agreement ratification, so
Costa Rica has until Mar. 1, 2008, since the
agreement was first ratified by El Salvador on Mar. 1, 2006.
The U.S. Meat Export Federation is the trade
association responsible for developing
international markets for the U.S. red meat
industry and is funded by USDA, exporting
companies, and the beef, pork, lamb, corn,
sorghum and soybean checkoff programs.
This article can be viewed at:
http://www.truthabo uttrade.org/ article.asp? id=8062
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