WHY FREE TRADERS CAN FAIRLY JUSTIFY
KEEPING CITRUS TARIFF

Publication: The Tampa Tribune
Printed: Monday, November 10, 2003

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.