Canton Repository

May 8, 2005

CAFTA could have modest impact in Ohio

By Paul M. Krawzak
Copley News Service

WASHINGTON — A proposed Central American free-trade agreement would boost Ohio exports, but the overall impact of the agreement would be modest at best in the state, based on interviews with business and labor officials and economic projections.

Area manufacturers such as the Timken Co. and Diebold expect little if any increase in their sales if Congress approves the Central American Free Trade Agreement (CAFTA).

The companies have few customers in the six Latin American nations covered by the pact, officials said.

CAFTA would increase Ohio agricultural exports to the countries, but by a relatively small amount, according to projections. The pact includes Honduras, Costa Rica, Guatemala, Nicaragua, El Salvador, the Dominican Republic and United States.

President Bush favors CAFTA, which needs approval from Congress to take effect.

As the sixth-largest exporting state, Ohio is a major trading partner with Canada, Mexico, Japan and several other countries. But Ohio ranks 18th in exports to CAFTA countries.

Of the state’s $31.2 billion in exports last year, CAFTA nations accounted for $197 million, or less than 1 percent.

Top Ohio exports to CAFTA countries include fabrics, motor vehicles, plastic and synthetic products, engines and machinery.

The Timken Co., a global manufacturer of bearings and steel, sold $120 million worth of products in all of Latin America last year, including Mexico, Central America and South America. That accounted for less than 3 percent of the company’s $4.5 billion in global sales.

“It’s a very, very small amount,” said Timken spokesman Jason Saragian.

The Canton-based company does not have any manufacturing or other facilities in the CAFTA countries.

Diebold sold about $3 million in automatic teller machines and related equipment in Central America last year, less than 1 percent of its $2.4 billion in global sales, company spokesman Mike Jacobson said.

The North Canton-based company has a distributorship in Costa Rica, one of the CAFTA nations.

Jacobson said it’s too early to tell what impact the agreement might have on Diebold. But at present, he added, trade barriers are not an issue in Central America.

CAFTA is “actually a definite win for Ohio farmers,” said Constance Jackson, vice president of agriculture ecology at the Ohio Farm Bureau Federation.

The affiliated American Farm Bureau Federation projects the pact would boost Ohio agricultural exports to CAFTA nations by $23 million a year by 2025, when the agreement would be fully phased in.

That’s an increase of less than 2 percent over the $1.2 billion in Ohio agricultural exports in 2003, the latest year available.

Poultry would see the largest increase with $9 million in added yearly exports, followed by beef with $5 million, soybeans $4 million, dairy and wheat $2 million each and corn with $1 million.

Although the Ohio Farmers Union opposes CAFTA, its president, Joe Logan, concedes agricultural exports would rise slightly under the agreement.

“It will make it possible for us to export more products and, frankly, I guess we probably will export a few more products,” he said.

On the downside, he said, agricultural imports from Central America also will increase, “and those will put a lot more competitive pressure on (U.S.) farmers.”

Other area companies either do not believe they will be affected by CAFTA or they were reluctant to discuss the trade agreement.

“We don’t think it will affect us,” said Bonny Fowler, spokeswoman for Longaberger Co., a Newark-based basket maker with a factory in Hartville.

The company doesn’t export baskets or face competition from low-cost producers, she said.

J.M. Smucker Co. in Orrville, the nation’s top jam producer, declined through a spokeswoman to discuss trade.

Republic Engineered Products, a Fairlawn-based specialty steel maker, did not return calls seeking comment on the trade pact. Greer Steel Co. in Dover also did not return calls seeking comment.