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Prospects dim for Ecuador trade pact

Ecuador’s already dim chances for an extension of the Andean Trade Promotion and Drug Eradication Act, which expires July 31, slid from dim to completely dark in the past 30 days, a casualty of the controversy over U.S. intelligence contractor Edward Snowden’s release of classified material on government surveillance. Cut roses imported from Ecuador into this country were to begin carrying a new 6.8 percent tax as of Aug. 1.

Ecuador supplies about 30 percent of the cut roses purchased in the United States and exported $166.3 million worth of flowers at their landed value in 2012, of which $92 million, or 55 percent, were fresh-cut roses. Of every dollar spent here on Ecuador products under the ATPDEA, 27 percent goes to Ecuadorian farmers and bouquet makers, 6 percent goes to airlines and transporters, and 67 percent goes to the U.S. production chain, according to Ecuador’s U.S. Embassy.

Aware of its tenuous chances for the U.S. Congress to extend the trade pact, the country sought to have the Obama administration add roses and rose bouquets to the Generalized System of Preferences, which provides duty-free imports for specific products from about 100 countries. The administration recommends products and countries, but Congress still must approve.

The most recent flap in the strained relationship between the two countries took place in late June, when Ecuadorian President Rafael Correa unilaterally renounced the trade agreement, citing pressure from the U.S. to deny Snowden asylum in Ecuador.

President Obama responded on June 27 by announcing he was deferring decisions on petitions to add three products to GSP: cut roses, frozen broccoli and certain preserved artichokes-all high on Ecuador’s wish list. Vice President Joe Biden reportedly smoothed relations in an early-July phone conversation with Ecuadorian President Correa, The New York Times reported July 12.

“Now we are faced with the possibility of not having the ATPDEA extended for Ecuador on July 31. Roses are not being added to the GSP at this time and the GSP has to be voted on by Congress and extended by July 31 for the other products to be imported duty-free,” was how Christine Boldt, of the Association of Floral Importers of Florida, summed it up in a letter to AFIF members.

Boldt, executive vice president of the group, wrote: “So, in order for the flower industry to prepare for the possibility that duties will go into effect on Aug. 1, 2013, the following would be the amount assessed by the U.S. Customs & Border Protection agency for imported flowers: Roses and Spray Roses, 6.8%; Mini Carnations, 3.2%; Everything Else, 6.4%.”

Colombia, which has good relations with the United States, won Congressional approval of a free trade agreement about a year ago that included its floral products, and the deal was made retroactive back to when the previous trade agreement had expired, so U.S. importers were refunded the tariffs they had paid.