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Since 1996, two large Brazilian orange juice companies, Cutrale and Citrosuco, have been producing part of their juice in Florida, where they purchased local plants.
Two transnational corporations that operated in Brazil, France’s LouisDreyfus Citrus and the U.S. firm Cargill, followed suit, thus swelling the “Brazilian invasion” that has triggered fears among Florida citrus growers.
There are a number of factors explaining the decision to invest abroad, but the barriers faced in the U.S. market by Brazilian orange juice exports were the main reason, Ademerval García, president of the Brazilian Association of Citrus Exporters (Abecitrus), told IPS.
Each ton of concentrated juice from Brazil, the world’s largest producer and exporter, pays 418 dollars in import duties, equivalent to more than 40 percent of the current price, which ranges from 900 to 1,000 dollars a ton.
The tariff is fixed by law, and thus becomes proportionately larger when prices fall, which means “a heavier penalty for the more efficient” producers who are able to bring down costs, said García.
The barrier thrown up by U.S. law protects the economy of the state of Florida, where citrus fruit is the chief farm export, generating 90,000 direct jobs.
Although the European Union also heavily taxes orange juice imports, with a 15.2 percent duty, it absorbs 70 percent of Brazil’s exports, since it has no major orange juice production of its own.
To compete despite the trade barriers, Brazilian industry must pay its workers and citrus growers low wages, lamented the president of Abecitrus.
Brazilian orange juice is competitive because of its lower costs, which are a result of “the rural poverty and low wages in this country,” admitted García, who argued that the protectionist practices of Brazil’s large foreign markets made it impossible to improve that situation.
The protectionism practiced by the North also hurts investment, as in the case of the Cutrale and Citrosuco firms, which began to produce part of their juice in Florida to get around the U.S. tariff barriers, at the expense of expanding the scale of their operations and production – and, in consequence, employment – in Brazil.
Other sectors are burdened with similar problems. The iron and steel industry, for example, faces barriers and constant threats of lawsuits in the United States for supposedly “dumping” its goods on that market at below cost, which has spurred Brazilian industry to set up shop in that country.
The La Gerdau company, for instance, has already purchased several factories in the United States.
In other cases, especially in the area of trade in farm products, the countries of the North encourage imports of raw materials by exempting them from duties, while heavily taxing imports of industrialised goods.
Thus, the coffee roasting industry is concentrated in rich countries, rather than the developing countries that produce the crop. Something similar occurs with soybeans and leather.
García acknowledged that many other factors, like the need to expand outwards and seek new markets, were leading Brazilian companies to invest increasing amounts of resources abroad.
“In Florida, there are 279 companies with Brazilian capital,” involved in the broadest range of activities, he said.
Other factors leading Brazilian businesses to invest overseas are the high taxes and transport costs and heavy, costly red tape faced by companies in Brazil, which also stand in the way of greater growth of exports, said García.
He also complained that Brazil’s diplomatic efforts were of no help regarding such problems.
Ccountries like Colombia, Mexico, Venezuela and the Caribbean island nations have been successful in getting the United States to remove trade barriers, unlike Brazil, whose foreign ministry “dedicates 90 percent of its time to the Southern Common Market (Mercosur trade bloc – Argentina, Brazil, Uruguay and Paraguay), forgetting the high priority of the truly important markets,” he said.
But other experts see such complaints as exaggerated, and point out that Brazil’s diplomatic efforts, especially against protectionism in agricultural trade, are well-known. Furthermore, granting concessions to Brazil, Latin America’s giant, is not the same thing as granting them to smaller Latin American or Caribbean nations.
In the case of orange juice, for example, Brazil is the world’s top producer and exporter. Its industry, concentrated in the southern state of Sao Paulo, exported 1.1 million tons last year, bringing in 1.3 billion dollars in revenues, Abecitrus reported.
Brazil’s citrus sector, which employs 400,000 workers, accounts for nearly half of the world’s output, and 80 percent of international trade in orange juice. The United States produces only a little bit less, but most of it is consumed internally, unlike the case of Brazil.
Global competition, in the case of orange juice, is basically limited to the states of Sao Paulo and Florida.
Due to the lower production costs in Brazil, a result of cheap labour, Florida growers are worried about the effects of the creation of the Free Trade Area of the Americas (FTAA), the talks on which are to be concluded in 2005.
They fear that the continent-wide integration process could eliminate existing barriers and pave the way for an invasion of the U.S. market by Brazilian orange juice.
BRAZIL: Protectionism in North Punishes Citrus Growers Threefold
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Mario Osava
- The global orange juice industry shows that the protectionism practiced by the industrialised North punishes competitors in the South threefold, by blocking exports, depriving developing countries of investment, and making it impossible for them to pay their workers better, complain exporters in Brazil.Since 1996, two large Brazilian orange juice companies, Cutrale and Citrosuco, have been producing part of their juice in Florida, where they purchased local plants.
Two transnational corporations that operated in Brazil, France’s LouisDreyfus Citrus and the U.S. firm Cargill, followed suit, thus swelling the “Brazilian invasion” that has triggered fears among Florida citrus growers.
There are a number of factors explaining the decision to invest abroad, but the barriers faced in the U.S. market by Brazilian orange juice exports were the main reason, Ademerval García, president of the Brazilian Association of Citrus Exporters (Abecitrus), told IPS.
Each ton of concentrated juice from Brazil, the world’s largest producer and exporter, pays 418 dollars in import duties, equivalent to more than 40 percent of the current price, which ranges from 900 to 1,000 dollars a ton.
The tariff is fixed by law, and thus becomes proportionately larger when prices fall, which means “a heavier penalty for the more efficient” producers who are able to bring down costs, said García.
The barrier thrown up by U.S. law protects the economy of the state of Florida, where citrus fruit is the chief farm export, generating 90,000 direct jobs.
Although the European Union also heavily taxes orange juice imports, with a 15.2 percent duty, it absorbs 70 percent of Brazil’s exports, since it has no major orange juice production of its own.
To compete despite the trade barriers, Brazilian industry must pay its workers and citrus growers low wages, lamented the president of Abecitrus.
Brazilian orange juice is competitive because of its lower costs, which are a result of “the rural poverty and low wages in this country,” admitted García, who argued that the protectionist practices of Brazil’s large foreign markets made it impossible to improve that situation.
The protectionism practiced by the North also hurts investment, as in the case of the Cutrale and Citrosuco firms, which began to produce part of their juice in Florida to get around the U.S. tariff barriers, at the expense of expanding the scale of their operations and production – and, in consequence, employment – in Brazil.
Other sectors are burdened with similar problems. The iron and steel industry, for example, faces barriers and constant threats of lawsuits in the United States for supposedly “dumping” its goods on that market at below cost, which has spurred Brazilian industry to set up shop in that country.
The La Gerdau company, for instance, has already purchased several factories in the United States.
In other cases, especially in the area of trade in farm products, the countries of the North encourage imports of raw materials by exempting them from duties, while heavily taxing imports of industrialised goods.
Thus, the coffee roasting industry is concentrated in rich countries, rather than the developing countries that produce the crop. Something similar occurs with soybeans and leather.
García acknowledged that many other factors, like the need to expand outwards and seek new markets, were leading Brazilian companies to invest increasing amounts of resources abroad.
“In Florida, there are 279 companies with Brazilian capital,” involved in the broadest range of activities, he said.
Other factors leading Brazilian businesses to invest overseas are the high taxes and transport costs and heavy, costly red tape faced by companies in Brazil, which also stand in the way of greater growth of exports, said García.
He also complained that Brazil’s diplomatic efforts were of no help regarding such problems.
Ccountries like Colombia, Mexico, Venezuela and the Caribbean island nations have been successful in getting the United States to remove trade barriers, unlike Brazil, whose foreign ministry “dedicates 90 percent of its time to the Southern Common Market (Mercosur trade bloc – Argentina, Brazil, Uruguay and Paraguay), forgetting the high priority of the truly important markets,” he said.
But other experts see such complaints as exaggerated, and point out that Brazil’s diplomatic efforts, especially against protectionism in agricultural trade, are well-known. Furthermore, granting concessions to Brazil, Latin America’s giant, is not the same thing as granting them to smaller Latin American or Caribbean nations.
In the case of orange juice, for example, Brazil is the world’s top producer and exporter. Its industry, concentrated in the southern state of Sao Paulo, exported 1.1 million tons last year, bringing in 1.3 billion dollars in revenues, Abecitrus reported.
Brazil’s citrus sector, which employs 400,000 workers, accounts for nearly half of the world’s output, and 80 percent of international trade in orange juice. The United States produces only a little bit less, but most of it is consumed internally, unlike the case of Brazil.
Global competition, in the case of orange juice, is basically limited to the states of Sao Paulo and Florida.
Due to the lower production costs in Brazil, a result of cheap labour, Florida growers are worried about the effects of the creation of the Free Trade Area of the Americas (FTAA), the talks on which are to be concluded in 2005.
They fear that the continent-wide integration process could eliminate existing barriers and pave the way for an invasion of the U.S. market by Brazilian orange juice.
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