LANSING – The Central American Free Trade Agreement could result in increased exports for Michigan growers but also lead to a greater dependence on imported sugar, a move that has state officials and the sugar industry worried.

Opponents of the Central America Free Trade Agreement, which President George W. Bush signed into law Tuesday, say the new agreement may cause the same effect that the North American Free Trade Act did in Michigan – namely, 63,148 jobs lost between 1993 and 2004, according the U.S. Bureau of Labor Statistics. The sugar industry, in particular, is worried that cheap imported sugar will cause sugar beet plants to close, especially in the Thumb area.

Other opponents include organized labor and environmental groups, while many agriculture groups are in favor of the agreement, which will lower trade barriers and tariffs between the United States, El Salvador, Nicaragua, Guatemala, Honduras, Costa Rica and the Dominican Republic.

The sugar industry stands to be hit hardest in Michigan. Currently, Michigan Sugar has 500,000 100-weights of sugar in a storehouse – at their expense – because of limits placed on how much they can have in the market. World Trade Organization rules dictate the U.S. must import 1.256 million tons of sugar a year, and CAFTA opponents say that could only get worse and force the sugar manufacturers to close down.

“We’re the ones with the target on our back,” said Dick Leach, director of government relations for Michigan Sugar and executive VP of the Michigan Sugar Committee.

Leach said his company provides a $300 million impact on the state each year and is the third largest sugar beet cooperative in the country, producing 900 million pounds each year. Michigan Sugar operates four plants in the Thumb area.

In contrast, Sarah Black, director of the public policy and commodity division of the Farm Bureau, said beef and pork exporters face an import price hike of 30 percent in Central American countries, and that industry could save $8 million if those tariffs are lifted.

The dairy industry, Michigan’s largest cash crop, also stands to make money if tariffs are removed, as does the soybean industry, which would increase exports by $2 million per year.

“There will be more demand for exports, which means more demand for processing, which means more jobs created,” Black said.

Michigan Farm Bureau president Wayne Wood issued a statement soon after CAFTA was signed, saying the agreement provides market access for Michigan commodities to CAFTA countries by reducing import tariffs. While he did express concern with the impact on Michigan’s sugar industry, he said Farm Bureau would work with the U.S. Department of Agriculture to make sure the agreement has minimal negative impact on sugar.

“Any threat to that industry is going to be a threat to the (state) economy,” said Rep. John Espinoza (D-Croswell). “It’s going to continue a trend that’s been going for several years, and I’m afraid with trade agreement such as this, we’re just not going to be competitive.”

The Michigan AFL-CIO said the Lear Company, which employs 9,400 in Michigan alone, has plans to expand in Honduras, and Michigan will see more jobs lost in manufacturing, cotton and at state ports.

“We feel for the family farmers growing sugar beets in Michigan who were betrayed by Congressman Dave Camp (of Midland),” said Mark Gaffney, president of the Michigan AFL-CIO, referring to the Republican representative who voted in favor of CAFTA. “We thank (Republican) representatives Thaddeus McCotter (of Livonia) and Candice Miller (of Mt. Clemens) for understanding the job situation in this country and we pledge to fight unfair trade agreements in the future.”

The Department of Agriculture and Michigan Economic Development Corporation have not taken an official position on CAFTA yet, but officials of those groups are looking into the agreement.

Richard Studley, vice president of governmental affairs for the Chamber of Commerce, said Michigan can’t buy only state-manufactured products, because then those who work in exports would be unemployed.

“We believe the passage of CAFTA will have a positive impact on Michigan residents and jobs,” he said. “Today and tomorrow and for the foreseeable future, Michigan’s residents and businesses are going to compete in a global marketplace, and we have to be ready for that.”

But while free trade is the way to go, government-managed trade is not, which is what NAFTA and CAFTA is, said Mark Brandly, an assistant economics professor at Ferris State University.

“Free trade lowers prices, increases competition and gives us more choice,” he said. “CAFTA centralizes power and in the long run that’s a bad thing.”

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