(May 31) It won’t be easy, but U.S. produce exporters have a lot to gain in upcoming World Trade Organization negotiations, according to an analysis of horticultural trade by the American Farm Bureau Federation. The report, prepared last year, indicates fruit and vegetable growers in the U.S. face subsidized competition and other tariff and nontariff barriers to trade.
For example, the report shows that the differences in tariff levels in horticulture are more extreme than for U.S. agriculture in general. The average world import tariff on vegetables is 69%, whereas the average U.S. vegetable import tariff is 7%. Likewise, the average global import tariff on fruits is 58%, but the U.S. tacks on only an average tariff of 4%.
The trade issues that would most help the produce industry at the WTO:
- Dramatically reducing European Union domestic support and export marketing programs
- Reducing global tariffs for fruits and vegetables
- Reducing technical barriers to trade
The report noted that U.S. horticultural exporters have suffered a double whammy from Europe in the past three decades. Imports have increased to the U.S. and to third-world countries, while U.S. exports to the European Union have declined.
While the U.S. fruit and vegetable industry receives no regular direct financial assistance, the EU spent more than $19.5 billion in 1996-97 for domestic support of its horticultural industry, and total outlays exceeded $26 billion in 2000.
Some U.S. produce industry leaders — particularly in Florida — fear they have more to lose than gain with a regional trade deal with Latin American countries.
But the Farm Bureau notes tariff reductions are possible for fruits and vegetables in Latin America.
Tariffs range from a low of 10% for some fruits in Argentina, 15% for some fruits in Brazil, to a high of 70% for fruits and vegetables in Colombia and 138% for selected vegetables in Guatemala.
The report said market access issues also are important for the future of U.S. horticultural trade and must be addressed at the WTO. Some examples of pending issues:
- Japan’s technical barriers have inhibited exports.
- India has imposed additional charges on imports, installed restrictive import regimes and increased inspection levels of imported fruits.
- South Korea has set a restrictive quota for fresh potatoes, set at 11,286 metric tons. The quota will increase only 7,000 metric tons in 10 years. The country also maintains a high tariff for fresh potatoes of over 30%, and anything beyond that quota is charged at a prohibitive 338%.
- Mexico prohibits imports of a number of U.S. horticultural commodities due to phytosanitary measures the farm bureau says lack scientific merit, including California avocados, Florida grapefruit, peaches not produced in California and U.S. fresh and seed potatoes.
- Canada employs a number of technical barriers to prevent the import of U.S. potatoes into its market. Those include phytosanitary barriers, anti-dumping duties and prohibition on consignment sales.
- A costly and restrictive entry price system thwarts U.S. exports to the EU. The net result of the EPS is that U.S. producers pay more duties on their exports even though the European Union’s tariff on certain horticultural imports was reduced during the Uruguay Round. The report said excessive subsidization of Spanish clementines has resulted in severe market disruption in the U.S. citrus market.
- Indonesia has increased its reference price used to determine import duties paid on certain horticultural exports from the U.S. In particular, the government of Indonesia bases the import duty not on the value of the import shipment or its market price, but rather on a price determined by the Indonesian government.
- Tariffs in Southeast Asia are among the highest in the world for horticultural and other agricultural imports.
- Australia: Australia bans U.S. imports of Pacific Northwest apples, Florida citrus and imposes stringent import requirements on California table grapes.