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Free-trade discord takes toll on flower importers

Miami Herald, Miami

Free-trade discord takes toll on flower importers

By Mimi Whitefield

2 July 2011

Since Valentine’s Day, Miami flower importers have watched their expenses climb, contending with rising fuel prices and surcharges and, most vexing of all, the expiration of an Andean trade program that allowed them to bring in flowers from Colombia and Ecuador without paying duties.

Now U.S. flower importers must pay duties ranging from 3.4 percent to 6.8 percent on the billions of roses, carnations and other blooms imported from Andean countries — the source of about 90 percent of the flowers shipped through Miami International Airport.

“For us, it’s been very difficult. This is really like putting a sales tax on flowers,’’ said Geno Valdes, president and chief executive of Sunburst Farms, one of South Florida’s oldest and largest flower importers and distributors.

So it should come as no surprise that those in South Florida’s flower importing industry, which handles around 89 percent of the cut flowers that arrive in the United States, were closely following this week’s maneuvering on the long stalled U.S.-Colombia Free Trade Agreement and an effort to attach renewal of the Andean Trade Preferences-Drug Eradication Act to it.

The administration also wants the expired Generalized System of Preferences, which allowed thousands of products from around the world to enter the United States duty-free, tied to the bill that implements the Colombia trade deal.

The Andean preference act, or ATPDEA, was designed to give Colombia and other nations economic alternatives to the drug cartels and encourage legal exports to the United States by allowing most Andean products, including flowers, to enter the U.S. market duty-free. It must be renewed periodically.

When it expired just a few days before the Valentine’s holiday, it was allowed to languish and it has become tied up in the wrangling over the Korea free trade agreement and long stalled trade pacts with Panama and Colombia.

Although the Korea pact is of more recent vintage, the Colombia and Panama agreements were approved by their respective legislatures in 2007. The trade deals, which will phase out nearly all tariffs, have yet to be introduced in the U.S. Congress.

There appeared to be progress of sorts this week when the Senate Finance Committee scheduled a mock markup session — the first step toward introduction of the trade agreements in the Senate.

But that fell apart, leaving in question how the agreements will move forward.

Republicans, incensed at a decision to attach renewal of trade adjustment assistance (TAA) — a controversial program that provides income support and training for U.S. workers who have lost their jobs as a result of foreign trade — to the implementing bill for the Korea trade pact, boycotted the Thursday session.

While TAA inclusion may have made the free trade agreements more palatable to Democrats, Republicans have questioned not only the program’s effectiveness but also its price at a time when the United States is facing a $14 trillion deficit.

“Between an ugly process and questionable policy, you have some very ticked-off Republicans on the Finance Committee,’’ Utah Sen. Orrin Hatch, the ranking Republican on the committee, said in a speech at the American Enterprise Institute. He also complained that sufficient time hadn’t been scheduled to hear the 97 amendments tacked on the three trade agreements.

The Obama administration has said passage of the trade agreements is critical to reaching its goal of doubling U.S. exports by 2014 and will pave the way for job creation in the United States.

But Senate Republican Leader Mitch McConnell, of Kentucky, said by including TAA, “the administration risks losing Republican support for [trade agreements] we have long been calling for.’’ He urged Obama to send all three pacts to Congress without delay — minus “extraneous poison pills.’’

Christine Boldt, executive vice president of the Association of Floral Importers of Florida, had predicted that TAA inclusion wouldn’t fly. “This whole thing is a political game,’’ she said.

Meanwhile, she said, the costs of having neither a free trade agreement with Colombia nor renewal of Andean trade preferences are mounting.

“South Florida flower importers are paying an extra $2.5 million per month in duties that they didn’t anticipate or budget for” because of the lapse in the Andean program, said Boldt. And that has meant cash-flow problems for some importers, she said.

Flower importers have been passing the additional costs along to retail florists. But some supermarkets and other mass-market customers with long-term contracts with flower distributors have balked at the price increases, said Valdes.

“Most understand, but some will fight you on it,’’ he said. “Ultimately, the consumer sees the price increases.’’

Although the free trade agreement with Colombia would eventually take precedence over the Andean trade preferences, Boldt said it’s still important to renew ATPDEA. Even if the trade agreement passed tomorrow, there would be a delay of 18 to 24 months before it would go into effect, she said.

Before the trade pacts can move forward in the House, they also need to go through a mock markup and there could be bumps along the way, too.

The trade agreements were first negotiated during the Bush administration but have undergone a series of revisions, including the negotiation of an action plan with Colombia to stop violence against labor unionists and protect their rights.

Rep. Sander Levin, the Michigan Democrat who is the ranking member of the House Ways and Means Committee, said he is satisfied with the revisions that have been made to the proposed trade agreements with Korea and Panama.

But he said he will actively oppose the Colombia FTA implementing bill unless it includes a specific reference to the action plan — an omission he calls a “fatal flaw.’’ Other Democrats have joined him.

A senior administration official said, however, that including the action plan isn’t necessary: “The action plan doesn’t require a change in U.S. law and therefore there is no need to include it in implementing legislation.”

With differences still to be ironed out, the clock is clearly ticking on the free trade agreements. The Obama administration has said it wants all three introduced by the August congressional recess.

If that doesn’t happen, “my concern is that the window on free trade is closing because it will be getting too close to the next elections and campaign season,’’ said Eric Farnsworth, vice president of the Council of the Americas.