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WHY
FREE TRADERS CAN FAIRLY JUSTIFY
KEEPING CITRUS TARIFF
Publication: The
Tampa Tribune
Printed: Monday, November 10, 2003
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P resident Bush is pushing a free trade agreement stretching
from Canada to Chile that he says would create a $13 trillion market
in 34 countries.
U.S. importers say a trade deal would give consumers here access to
more affordable products, and advocates for the proposed Free Trade
Area of
the Americas say it would save every American family $814 annually.
That's why in February, U.S. Trade Representative Robert Zoellick
announced that the United States would put all tariffs in the Fair
Trade Area
of the Americas on the table for negotiation.
But there is one tariff vitally important to Florida that must
be excepted from any agreement - the citrus tariff on frozen
concentrated orange
juice - and growers plan to be in Miami when trade talks resume
later
this month.
Growers say removal of the 29.5-cent- a-gallon tariff on orange
juice from Brazil - the world's largest orange producer - would
destroy
Florida's citrus industry. The tariff offsets most of the difference
in production
and labor costs between Florida (72 cents per pounds solid)
and Brazil (33 cents per pounds solid.)
``It's not a question of rough times, hard times,'' said Pasco
County grower Bob Barthle. ``We'll be out of business.''
There are both economic and political issues at play here.
Economically, the goals of any free trade agreement would
not be realized by the elimination of the orange juice
tariff. That's because 85 percent
of the world's oranges that end up in juice glasses are
grown in
Florida and Sao Paulo, Brazil.
There are perhaps 10 growers in Florida large enough
to sustain the loss caused by a lifting of the tariff
because
they have
their own
processing
capacity. But small and medium-sized growers, even
those up to several thousand acres in size, would not survive.
Even if the administration negotiated to phase out
the tariff over a period of years, capital would
dry up immediately.
And this on
top of
the lowest prices and biggest crop ever. These growers
would
be forced to sell out. And to whom? Growers from
Brazil or land developers.
There are five major grower/ processors in Brazil
that dominate the industry there and have substantial
investments
in Florida
processing.
These companies
do not own groves here, but they enjoy market access,
despite the tariff, as evidenced by the volume
of fruit imported
annually for
processing.
The U.S. market is not ``closed'' at all. We are
net importers, as domestic consumption exceeds
domestic supply.
From the consumers' view, elimination of the
tariff would lead to the global domination
of the juice
market by
these five
multinational firms
acting as a cartel and thereby decreasing competition.
Consumers would not see lower prices as a result.
Politically, it is important to recognize that
citrus is not a subsidized commodity. The
costs of maintaining
the
tariff,
unlike
those for
grains or even sugar, are borne by those
who wish to import, not by the American
taxpayer.
The North American market was developed by
and for the benefit of Florida growers.
Why use free
market
principles
to punish
one of
the few free
market agricultural commodities in the
country?
Economic And Political Realities
Citrus is not like steel or sugar. There
are no ancillary domestic industries
negatively affected by taking
care of citrus. No
parts suppliers, steel
consumers, candy manufacturers, soda
makers. There
is no downside to helping the citrus
industry.
Gov. Jeb Bush is in a delicate spot.
He recognizes the value of free
trade but
understands the
importance of
citrus to
Florida and has
lobbied with his brother's trade
advisers. Moreover, he hopes Miami
is chosen
as the pact's headquarters, but
he may need Brazil's vote to secure it.
Still, President Bush and his political
advisers must know that most
of Florida's citrus is
grown along the
Interstate
4 corridor
and
in ``red'' counties farther
south - counties that the president must, but
is certainly
not guaranteed to, win if he
is to capture Florida in 2004.
We're optimistic that President
Bush can craft a free trade agreement
and still
protect citrus,
which
in
a curious
way stands almost
alone among agricultural products.
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