Sugar: Putting the CAFTA-DR into Perspective

Increased sugar market access for Central America and the Dominican Republic in the first year under the CAFTA-DR amounts to only a small portion of U.S. sugar production.  The increased access is equal to little more than one day’s production in the United States.

In the first year, increased sugar market access for Central America and the Dominican Republic under the CAFTA-DR will amount to about 1.2 percent of current U.S. sugar consumption, growing very slowly over 15 years to about 1.7 percent of current consumption.  Total U.S. sugar imports have declined by about one-third since the mid-1990s. Sugar imports under the CAFTA-DR would not come close to returning total U.S. sugar imports to those levels.

U.S. over-quota tariffs on sugar will not change under the CAFTA-DR.  The U.S. over-quota tariff is prohibitive at well over 100 percent, one of the highest tariffs in the U.S. tariff schedule.

The United States will establish tariff-rate quotas (TRQs) for the Central American countries and the Dominican Republic.  The quantity allowed under the TRQs is the lesser of the amount of each country’s net trade surplus in sugar or the specific amounts set out in each country’s TRQ.  The maximum quantity for all of the countries is 107,000 metric tons in the first year.  This maximum quantity will increase to 151,000 metric tons over 15 years.  The United States will also establish a quota for specialty sugar goods of Costa Rica in the amount of 2,000 metric tons annually.  To put these quantities in perspective, annual U.S. production in 2003/04 was about 7.8 million metric tons. 

Approval of the CAFTA-DR would not have a destabilizing effect on the U.S. sugar program.  Under the current Farm Bill, Congress set a "trigger" of about 1.4 million metric tons of total imports; the domestic sugar program is unaffected when imports are below this amount.  Even with the modestly increased imports from the Central American countries and the Dominican Republic that are permitted under the CAFTA-DR, there is a comfortable import "cushion" under the current Farm Bill provisions that allow for marketing allotments as long as imports do not exceed a specified level.  In addition, the Agreement includes a mechanism that allows the United States, at its option, to provide some form of alternative compensation to CAFTA-DR country exporters in place of imports of sugar.

Increased sugar imports from Central America and the Dominican Republic countries would amount to less than one-quarter of one percent of total annual U.S. trade with these countries.  Sugars and sweeteners account for less than one percent of U.S. farm cash receipts, and about one percent of U.S. agricultural exports.

Farms growing sugar account for less than one-half of one percent of all U.S. farms. By contrast, 42 percent of all U.S. farms raise beef cattle, 23 percent grow corn, 19 percent grow soybeans, and 6 percent raise hogs.  Producers of these commodities can expect to see significant benefits from the CAFTA-DR through lower tariffs and greater market access for their exports to Central America and the Dominican Republic.