Fair Trade Advocates Say Open Markets Could Shatter Small Farms

Original Publication Date: 
22 May, 2005

Part Two of Three on the CAFTA Clash

The Central American Free Trade Agreement would spread the effects of unequally subsidized agribusiness onto freshly opened markets in Latin America, while enhancing the impact NAFTA had on small farmers in the US.

May 23 - A proposed trade agreement that would dismantle barriers shielding US, Central American and Dominican farmers in the global marketplace, has become a focal point in the controversy over international agricultural trade, and fair trade advocates are warning Congress that the accord could render the free market system even more volatile and less equitable.

Under the Dominican Republic-Central American Free Trade Agreement (CAFTA) the agricultural sectors of the US, El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica, and the Dominican Republic would be stripped of tariffs and similar trade protections. In the view of the opposition, this policy, now awaiting full ratification by the US and three other member countries, would perpetuate a trend in US farm policy that has fattened multinational agriculture organizations and starved smaller farms across the world.

'[CAFTA] is going to be a disaster for farmers, in particular in the other member countries,' predicted Robert Scott, director of international programs at the Economic Policy Institute (EPI), a progressive think tank that analyzes how free trade agreements disrupt rural economies.

Rallying in support of the agreement are agricultural industry groups such as the American Farm Bureau Federation, which called CAFTA a 'win-win for agriculture' and projected the policy could yield a net economic gain of $1.35 billion by 2024, including an added $47 million in beef exports and $62 million in wheat exports.

But critics charge that any gains under CAFTA would go to large agribusinesses at the expense of smaller producers. They also cast doubt on the optimistic export estimates, noting that economies of Central America and the Dominican Republic are simply too small to consume a great amount of US exports; the size of their combined economy, according to federal government estimates, is less than two percent that of the US.

Fair trade advocates argue that unrestricted free markets, rather than lifting farmers out of poverty, have plunged them deeper into financial insecurity. The watchdog group Public Citizen pointed out that under the North American Free Trade Agreement