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U.S. farmers question whether free trade agreements will yield benefits

(Saturday, June 28, 2003 -- CropChoice news) -- The following items are from the Agribusiness Examiner.

1. U.S. growers question whether free trade agreements will result in benefits

JOAN MURPHY, THE PRODUCE NEWS: Chile has become the first South American nation to sign a free trade agreement with the United States, clearing the way for tariffs on U.S. and Chilean farm goods to be phased out. But U.S. growers question whether the mounting agreements under negotiations with Latin American countries will result in market access for their products.

"American farmers, workers, consumers and businesses will benefit from improved access to the Chilean market, and this FTA will provide momentum to the ongoing negotiations in the Free Trade of the Americas and the global trade talks,"U.S. Trade Representative Robert Zoellick said June 6 while signing the accord in Miami. "This is an historic agreement that sets a high benchmark for future FTAs."

The United States and Chile began negotiations on the deal in December 2000, and discussions between the two countries continued until both parties signed the trade agreement. The first agreement in the region since the North American Free Trade Agreement in 1993, it represents the first step in the Bush administrations plan for a massive free trade agreement for all of Latin America. Congress must still approve the Chile-U.S. agreement before it can go into effect.

But there will be little short-term gain for Chilean fruit importers, said Jim DeMalo of Philadelphia-based U.S.Produce Exchange. Chilean fruits enjoy relatively low tariffs, he said.

One item that may change in price is Chilean avocados, which are assessed a $1.50 per-box duty. This would be phased out over the coming years. Chilean fruits experience little overlap with California products, he said, and imported avocados are important in supplementing the U.S. supply to meet increasing demand.

According to a new report by the U.S. International Trade Commission, the trade agreement will likely result in a "measurable increase" of U.S. imports of avocados, as Chile is the leading supplier of U.S. imports and the United States is Chiles leading export market.

But the impact on U.S. employment will be limited, said the report, because Chilean production is counter-seasonal (mainly August-January) to U.S. production (mainly March-August), and these imports compete more directly with products from Mexico and the Dominican Republic.

Also, U.S. avocado exports to Chile are not expected to rise as a result of the agreement, said the ITC report, which states that Chile represents a negligible market for U.S.exports of fruit owing to its small size, level of disposable income and a competitive domestic supply. Because of Chiles small size, U.S. producers target other markets for fruit exports such as Canada, the European Union, Japan and Mexico.

But U.S. fruit and vegetable growers are concerned with the Bush administrations emphasis on free trade agreements with Latin American countries, which they say will favor imports here rather than focusing efforts on opening U.S. agricultural market access to Asian and European nations.

"Market access is key to us," said Robert Guenther of the United Fresh Fruit & Vegetable Association, who questioned whether the accord would result in a viable market for U.S. produce. The Chilean agreement will "put more pressure on the U.S. market" as everyone competes for consumer dollars, he said. With the Chilean agreement finalized, the Bush administration is now focusing efforts on similar agreements with Costa Rica, El Salvador, Guatemala, Nicaragua and Honduras.

The Grocery Manufacturers of America praised the new agreement for immediately eliminating tariffs on more than 85% of consumer and industrial goods. The remaining product tariffs will be eliminated within four to 12 years, including those for sugar and dairy products.

Specifically, the U.S.-Chile FTA provides U.S. manufacturers of breakfast cereals, pasta and other products with immediate duty-free access to Chilean markets, allowing U.S. food manufacturers to regain their competitiveness against Canadian and South American products that already receive zero tariff treatment in Chile.

"GMA fully supports the aims of the U.S.-Chile Free Trade Agreement to increase global trade and market access, and to eliminate trade distorting tariffs," said GMA Director of International Trade Sarah Thorn. Chile has free trade agreements with Canada, the European Union, Mexico and South Korea. The U.S. has reached free trade agreements with Canada, Mexico, Israel and Jordan, plus Singapore, which has yet to be approved by Congress.

2. NAFTA forcing Mexican farmers to flee northward TESSIE BORDEN AND SERGIO BUSTOS, THE ARIZONA REPUBLIC: Wilfrido Iglesias Aņorve, a 78-year-old Mexican citrus farmer, expected at least some of his seven children to remain part of the family business.

But three years ago, most of them left Iglesias Aņorve's 25-acre orange grove in the small farming town of San Pablo Papantla in Veracruz state. It seems unlikely they'll ever return home.

One of his children is toiling in Florida's citrus groves. Another is in Canada. Three others are in Mexico City with plans to move to the United States. The other two are still at home, but Iglesias Aņorve figures they, too, will leave someday.

Four grandchildren also left: Two boys are in the United States, and two girls work in manufacturing plants near the U.S.-Mexican border.

"The young people, almost all of them, have left," Iglesias Aņorve said. The fact that Iglesias Aņorve's children have chosen to leave their birthplace and migrate elsewhere is not unusual in Mexico. What is unusual is that these migrants come from Veracruz, a state with rich farming soil and little history of outward migration.

Immigration experts on both sides of the border say the North American Free Trade Agreement, which took effect in 1994, has given birth to a second wave of Mexican immigrants. They come from states such as Veracruz, Tabasco, Yucatan, Chiapas, Campeche, Quintana Roo and Sinaloa.

Manuel Angel Gomez Cruz, a researcher at Mexico's Autonomous University of Chapingo, said that before the trade pact, migrants typically ventured from a handful of Mexican states. Those states - Jalisco, Michoacan, Zacatecas, Guanajuato, Oaxaca and Guerrero - featured poor soil and a long migrant tradition that dated back to the end of the bracero program, which ran from 1942 to 1964 and allowed Mexicans to temporarily work in agriculture in the United States.

Veracruz and other states were self-sufficient and migration-free just five years ago, Gomez Cruz said. He said ending many tariffs on food products under the North American Free Trade Agreement, coupled with bad Mexican farm policy, has left 25 million people with little choice but to cross the border.

"At the moment you destroy (agriculture), where are 25 million people going to go?" Gomez Cruz asked. "If we were a developed country, maybe we could find them work in other areas. But right now our country has an unemployment problem."

The displaced farmers have been a major factor in the surge of undocumented immigrants from Mexico living in the United States. Their numbers nearly doubled, to five million, from 1996 to 2000, according to the latest government estimates.

Arrests of undocumented immigrants also have climbed, from fewer than one million in 1994 to 1.6 million in 2000, an all-time record, according to the U.S. Border Patrol.

Though a handful of large-scale farming operators have been able to reap some trade success, small and midlevel farmers in Mexico didn't stand a chance of competing against their northern neighbors, said Benito Muņoz, treasurer of the San Luis Rio Colorado, Mexico, chapter of BONFIL, a farmers cooperative.

The hardest hit are grain growers who don't come close to producing exportable amounts and who don't receive hefty government subsidies like their U.S. counterparts, Muņoz said. Nor can they get low-interest bank loans to expand their business.

"The difference is abysmal at every level," said Muņoz, whose group represents 287 farmers with average plot sizes of 60 acres. "And NAFTA is doing nothing to help us out. Some say it's been great. Sure, a great disappointment."

Mexico's unemployment rate grew 2.5 percent last year, Gomez Cruz said. Much of that loss occurred as border factories moved operations to the Far East, where labor had grown cheaper over the years and communist countries, like China, opened their economies to foreign investors.

Mexico now must create 1.2 million to 1.5 million jobs each year to keep the economy from shrinking.

In December, Mexican peasants and small farmer organizations began protesting a measure in NAFTA that lifted or reduced tariffs on several American farm products flowing to Mexico.

They wanted President Vicente Fox to renegotiate the agriculture chapter of NAFTA and devise a new internal farm policy.

In April, the farmers got a little bit of what they were seeking.

After four months of negotiation, Fox and the small farmer groups signed a deal. It contains, among other things, a promise from Fox to ask the United States and Canada about revising NAFTA provisions on white corn and beans and perhaps substituting it with a permanent import control mechanism that would "protect the legitimate interests of the national producers."

U.S. farmers grow and sell yellow, not white, corn. White corn is what is traditionally used to make tortillas, a mainstay of the Mexican diet. But Mexican farmers say American yellow corn, which the government buys cheaply to keep the price of tortillas low, has been flooding out their white corn, making it impossible to stay competitive.

The farmers agreement also provides about $266 million in emergency funding for farmers, the titling of cooperative land through existing programs and a promise to seek resolution of 165 court cases involving farm leaders, linked to their arrests during NAFTA protests.

Gomez Cruz doesn't trust the deal. He said Mexico should move to a policy that integrates the farm sector as part of the entire economy and takes into account what its millions of people can buy when they have a good income. More indifference, he said, will only send more undocumented immigrants to the United States and could turn farmers to illegal drug production and smuggling.

"One cannot predict the political scenario that is approaching at this moment," Gomez Cruz said. "Your skin crawls when you hear the aggression among the farmers. There are people who are entrepreneurs . . . who are up to their necks, and they don't know what to do."

Other leaders who opposed the deal agree. "There is a wearing down, a worsening of the situation in this country," farm leader Jaime Castillo Ulloa said. "Sooner or later, the problem is going to explode." Some experts said the refusal of U.S. and Mexican negotiators to include migration and labor issues as part of the historic pact is now coming back to haunt both countries.

Jorge Bustamante, former president of Mexico's College of the Northern Frontier who was a consultant during NAFTA talks, said U.S. and Mexican negotiators chose not to include the two issues because they were too politically explosive.

"The United States opposed including migration in the process, unless Mexico was willing to include oil," Bustamante said. "Mexico was not willing to let oil in, so the United States was not willing to let migration in."

The conflict arose again in May when a U.S. congressional committee called for linking any new immigration deal to U.S. investment in Mexico's state-run oil company. Though a non-binding resolution, the decision caused a furor in Mexico.

Census Bureau figures show that the number of people born in Mexico or of Mexican descent grew faster than the population of any other ethnic or racial group in the United States from 1990 to 2000. An estimated 21 million people in the United States claimed ties to Mexico in 2000, up from 13 million in 1990.

Immigration patterns also have changed. Since NAFTA took effect, Mexicans have left every corner of their country for every corner of the United States.

Mexicans and Mexican-Americans no longer settle solely in border states like California, Arizona and Texas. They are putting down roots in states like North Carolina, Georgia and Tennessee.

The number of Mexicans in North Carolina grew to nearly 247,000 in 2000, up from about 33,000 in 1990. The increase of about 650% topped all other states.

Experts say it is no coincidence that a record number of Mexicans have emigrated since NAFTA rolled out but dismiss the notion that the trade pact was the only factor driving immigration in the 1990s.

Demetrios Papademetriou, co-director of the Migration Policy Institute, a think tank in Washington, D.C., said the aging U.S. population, the rise in college-educated Americans and the growing ties between U.S. employers and Mexican workers over the past few decades are part of the new immigration trend.

"Look at the restaurant industry in New York," he said. "During the 1980s, you would go to the back of a restaurant to find illegal immigrants. Not anymore. The assistant manager, the waiters, the hostess, these jobs also are being filled by undocumented immigrants.

"NAFTA or no NAFTA makes no difference," Papademetriou said. "Mexican migrants will always come."