Trade Deal Will Level Playing Field

By John Murphy

DR-CAFTA, the Dominican Republic-Central American Free Trade Agreement will bring jobs to this country by knocking down excessive tarrifs. The South Bay's Rep. Jane Harman is wrong to oppose it.

What do you call it when one country unilaterally opens its own markets to imports while its trading partners maintain steep tariffs? Unfair, right?

This is exactly what America did 20 years ago, opening its doors to imports from Central America and the Dominican Republic in an effort to help these countries through "trade, not aid." Back then, these countries were struggling with severe economic problems and, in some cases, civil war. The U.S. initiative helped the neighboring region move into a new era of peace and economic growth.

Now, what would you say to a trade agreement that fixed this trade imbalance by leveling the playing field once and for all—an agreement that gives U.S. companies and workers the same access to the Central American and Dominican market they have enjoyed to our market since 1984?

Most of us would say: About time! As a matter of fact, Congress will vote shortly on just such a trade deal — the free trade agreement with Central America and the Dominican Republic known as DR-CAFTA.

DR-CAFTA will fix this imbalance by providing immediate, duty-free access to the six-country market for more than 80 percent of these U.S. goods on Day One.

Purchasing $15.7 billion in U.S. exports last year, the integrated Central American-Dominican market is on par with such advanced industrialized countries as France and Italy. In fact, the six countries buy more U.S. exports than India, Indonesia and Russia combined.

Who will benefit? American business, workers and farmers will. From services and agriculture to manufacturing and intellectual property, the U.S. business community is rallying to ask Congress to approve DR-CAFTA.

The numbers for California are compelling. The Golden State exported $659 million to the six countries in 2004, with a 20 percent surge in exports of computers and high-tech products from the previous year.

A new U.S. Chamber study projects DR-CAFTA will generate $221 million in new sales for California companies and $51 million in new earnings for the state's workers in its first year; these sums will rise to $2.5 billion and $573 million over a decade. It also projects more than 1,200 jobs will be created in California in the agreement's first year, rising to 13,000 new jobs over a decade.

For farmers and ranchers, the American Farm Bureau Federation has projected the trade agreement will boost U.S. agricultural exports by $1.5 billion annually. Central America and the Dominican Republic currently impose steep tariffs on California's top agricultural exports, including dairy products (up to 60 percent), fruits (up to 60 percent), tree nuts (up to 20 percent), rice (up to 60 percent), beef (up to 30 percent), and wine (up to 20 percent). DR-CAFTA will begin cutting these tariffs its first day.

Among the beneficiaries will be the Ports of Los Angeles and Long Beach and the thousands of workers who depend on exports and imports flowing through them. The Port of Los Angeles handled $16.9 billion worth of exports in 2003, making it the busiest in the United States. In addition to the 750 workers directly employed by the port, it supports more than 16,000 local jobs and 259,000 jobs throughout Southern California, according to the Business Roundtable.

Opponents, such as South Bay Rep. Jane Harman, D-El Segundo, in her March 29 Insight page column, charge that DR-CAFTA will hurt workers in the region, but this is not true. The agreement will help DR-CAFTA countries keep existing jobs in the face of Asian competition — and create new jobs.

Far from a race to the bottom, trade is a motor for creating good jobs. In America, jobs tied to trade pay a premium of roughly 15 percent over other jobs.

Finally, DR-CAFTA is a helping hand—not a handout—for some of our closest neighbors. The agreement will help consolidate democratic institutions. Consider how the region was wracked by civil war just 20 years ago. DR-CAFTA will help keep our next-door neighbors on the path toward growth and development. All in all, DR-CAFTA is a tremendous deal.

John Murphy is Vice President for International Trade at the U.S. Chamber of Commerce.

As published in the Daily Breeze on April 24, 2005.