Negotiations for a Western Hemisphere free-trade pact have Florida's agriculture industry fearing for survival. 

TAMPA — U.S. trade officials have stepped up efforts to trumpet the benefits of a massive free-trade zone encompassing the Western Hemisphere - from Alaska to the Tierra del Fuego on South America's southern tip.

The so-called Free Trade Area of the Americas would create a $13 trillion market and include 34 countries and 800 million people.

Every U.S. family would save $814 a year because the zone would eliminate tariffs passed on to consumers, trade advocates say.

Although many U.S. businesses support the concept - including the Port of Tampa - it has Florida's $7 billion agriculture industry, particularly citrus, fearing disaster.

Eliminating a 29.5 cent per gallon tariff on frozen concentrate orange juice from Brazil, which allows Florida citrus growers to offset cheap South American labor, is expected to be a major issue. Brazil is the world's largest orange producer.

Brazilian agribusinesses want to get rid of it. But eliminating the tariff, Florida growers say, means eliminating Florida citrus.

"We can't survive on a long-term basis if it is reduced or eliminated," said George Austin, a LaBelle grower. "I can't think of any conditions under which we could survive. This is the No. 1 issue for our industry."

For Florida's $1 billion winter vegetable industry, the FTAA conjures images of the North American Free Trade Agreement, a free-trade zone implemented in 1994 among the United States, Mexico and Canada. NAFTA resulted in a devastating flood of produce from Mexico and, most recently, Canadian greenhouses into the United States.

Several South and Central American countries are major producers of vegetables.

"It seems like trade negotiators are always willing to sacrifice agriculture at the negotiating table so they can obtain favorable treatment elsewhere," said Mac Carraway, chief financial officer for Pacific Tomato Growers, one of the largest produce companies in Florida. "In any trade agreement, the loser is usually agriculture."

The Bush Administration has long touted the FTAA as a way for U.S. and Latin American companies to expand their markets.

In February, U.S. Trade Representative Robert Zoellick announced the administration will put all tariffs in the FTAA zone on the table for negotiation. The announcement was designed to jump-start negotiation between the United States and Latin America.

U.S. companies supportive of FTAA see Brazil as an emerging economy of about 173 million people. Businesses involved in information technology, banking, services, architecture and accounting want free access to the Brazilian market.

The largest economy in South America is Brazil.

Mark Smith, executive vice president of the Brazil-U.S. Business Council, a pro-trade group sponsored by the U.S. Chamber of Commerce, said Florida has a lot more to gain than lose if the FTAA is created.

Free-trade advocates and U.S. importers say a trade deal with Latin America would give U.S. consumers access to more affordable goods and allow U.S. companies to sell to other countries.

In 2001, Florida was the second-largest trading partner with Brazil behind Texas, exporting everything from computers to chemicals to aviation equipment, according to the U.S. Department of Commerce.

The 2001 exports from Florida to Brazil totaled more than $1.8 billion. Smith envisions the commerce to grow exponentially with the implementation of the FTAA. He said one big market for U.S. companies should the FTAA become reality is Brazilian government contracts.
"At the end of the day, Florida's economy is a lot more than orange juice," Smith said. "The state has the potential to be a huge success story."

The Tampa Port Authority supports the FTAA. Brazil ranks as the seventh-largest trading partner with Tampa. Colombia is sixth and Venezuela is ninth.

"Tampa is in position geographically and infrastructurewise to really take advantage of this," Smith said.

Agriculture's Lament

But the increased trade argument is difficult for Florida agriculture to swallow. The industry is doing everything to protect itself if the massive free-trade zone is implemented. Citrus argues it is too important to Florida to sacrifice for the benefit of other industries.

To emphasize citrus' place in Florida's economy, the industry financed a $1.2 million advertising blitz which kicked off on Super Bowl Sunday.

The "Citrus Matters" campaign highlights the industry's $9 billion economic impact on the state. It also says citrus employs 90,000 people, generates $1 billion in taxes and produces 90 percent of the orange juice consumed in the United States.

The citrus industry is also considering building a war chest to fight for the tariff. The money would come from the Department of Citrus' budget.

Early last week, a contingency of Florida agricultural officials traveled to Washington for meetings with U.S. trade officials.

Carraway of Pacific Tomato Growers, represented at the meeting by the Florida Fruit and Vegetable Association, said Central and South America don't pose an immediate threat to Florida vegetable farmers.

However, he said a wide-ranging trade agreement could open up trade when countries get comfortable with one another. The U.S. government could establish export programs and loan guarantees, he said.

"Who knows what will happen once the trade lanes are opened and the infrastructure is in place," Carraway said. "They might establish programs that promote South American vegetables."

Citrus leaders have immediate worries. They argue eliminating the orange juice tariff will give Brazilian juice makers a monopoly on the industry.

This would give Brazilian producers a huge pricing advantage, the industry says. In addition to low labor costs - farm workers in Brazil are paid $60 a week - the five major Brazilian juice conglomerates would not have to pay the tariff.

The difference in price between Brazilian and U.S. juice would severely cripple U.S. producers. Then without competition, Brazilian companies could manipulate prices.

Craft Pact and Protect Citrus

Low consumer prices are the stated goal of the FTAA.

"You will see one nation and five companies control the entire juice market," said U.S. Rep. Adam Putnam, R-Bartow, a citrus grower who helped organize the 31-member task force that met in Washington. "They will exploit that, and people will pay higher prices for orange juice."

Putnam said the free-trade proposal with Brazil is designed for multinational corporations that want to take advantage of cheap labor in South America and large Midwestern grain producers wanting to sell surplus product.

Despite the obstacles, Putnam remains optimistic. He said the citrus industry's stance will not submarine a free-trade deal.

"You can craft a trade agreement and still protect citrus," he said.

Brazilian citrus representatives say eliminating the tariff won't hurt Florida.

"Florida industry is strong and capable enough to cope in a world without tariff," said Ademerval Garcia, president of Abecitrus, a Brazilian trade group. " ... our product is a complement to the Florida industry output and will continue to be so even after the tariff disappears."

Garcia suggested the Florida citrus industry turn its concerns to China, which he said will become a huge citrus producer.

Andy LaVigne, chief executive officer of Florida Citrus Mutual, which represents thousands of growers, said he believes the prospect of a Brazilian monopoly has sparked the interest of U.S. trade negotiators.

LaVigne also emphasized Gov. Jeb Bush's relationship with President Bush. Gov. Bush has said he hopes any trade agreement recognizes import sensitive commodities such as citrus.

Trade representative Zoellick has proposed a 10-year tariff phaseout for the citrus tariff instead of its immediate elimination.

Brazil is expected to fight this provision instead pushing for the complete elimination of tariffs on agricultural goods imported to the United States. The contentious negotiations are expected to continue throughout the next year. The goal is to have a plan in place by 2005, a goal most observers say is unattainable with all of the obstacles.

The Bush Administration can negotiate the trade pact, but ultimately Congress must approve it.

LaVigne said Zoellick's proposal shows the trade representative is listening.

"That's a good step for us, that's recognition we're a trade-sensitive commodity," LaVigne said. "Where it goes from here, we'll see."

(CHART) (C) CENTRAL AND SOUTH AMERICAN FARMING
Production by country in metric tons:

A truck loads orange juice concentrate from Brazilian tanker Orange Sky in Tampa. As talks for a free-trade zone from Alaska to the southern tip of South America get under way, citrus leaders say nixing the orange juice tariff will give Brazilian juice makers a monopoly on the industry.

"Florida industry is strong and capable enough to cope in a world without tariff," said Ademerval Garcia of Abecitrus, a Brazilian trade group, in support of a free-trade zone.