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FCOJ Tariff

The frozen concentrated orange juice (FCOJ) citrus tariff was initiated with the passage of the Smoot-Hawley Act (Tariff Act) in 1930. The Tariff Act imposed a tax of 70 cents per single strength equivalent gallon on imported citrus juice. The citrus tariff remained unchanged until 1947 when the General Agreement Tariffs and Trade (GATT) talks occurred in Geneva, Switzerland. During the GATT discussions, the citrus tariff was lowered to 35 cents per single strength equivalent gallon.

In 1963, the Kennedy Administration attempted to pass legislation that would reduce and possibly eliminate duties on imported citrus products. Florida Citrus Mutual battled against this legislation for four years. Fortunately, the hard work was rewarded and the duty on fresh oranges was maintained. Later, in 1970, the U.S. government again attempted to reduce citrus import tariffs. American citrus growers had operational costs that were four times higher than their foreign counterparts; therefore, a reduction in tariffs would render them helpless in the international market. Mutual again fought against this tariff reduction and won.

A U.S. Customs ruling in 1980 ushered in a decade full of legislative victories for Florida citrus growers. U.S. Customs ruled that processors couldn’t convert imported FCOJ into single strength orange juice in a Class 8 bonded warehouse in order to pay a lower tariff. If processors had been allowed to continue this practice, citrus growers could have lost $300 million a year. Soon after, the U.S. Department of Commerce discovered that the government of Brazil had provided illegal subsidies to growers as well as FCOJ exporters. The U.S. Department of Commerce then forced these companies to pay additional countervailing taxes on exports to the U.S. Three Brazilian producers protested this accusation, but Mutual fought back and the U.S. International Trade Commission ruled to uphold a countervailing duty on Brazilian FCOJ exports. Brazil once again attempted to bypass the tariff legislation and was discovered to have been dumping FCOJ under the fair market value in the United States. The U.S. Department of Commerce forced exporters from Brazil to pay an additional duty bond on FCOJ. An international trade court then ruled on an anti-dumping order that required continued surveillance of Brazilian prices. This was done in order to protect U.S. citrus growers from Brazilian exports being sold at less than fair market value. The battle for the protection of the citrus tariff continued at the Uruguay Round Tariff and Non-Tariff Measure Negotiations. Though they threatened to reduce the citrus tariff, Mutual combated the reduction and citrus products were excluded from tariff reductions.

Trade negotiations continued in the 1990’s with the advent of the North American Free Trade Agreement (NAFTA). NAFTA’s primary goal was to establish free trade between Mexico and the U.S. Also, during this time, the U.S.-Canada Free Trade Agreement sought to eliminate tariffs between Canada and the U.S. Mutual fought against the effort to eradicate tariffs and was victorious when the Generalized Agreement on Tariffs and Trade (GATT) upheld the tariff on imported citrus. Though NAFTA was finally passed during the 1992-93 season, it included special provisions for citrus. These provisions granted a 15-year phase-out on import tariffs as well as a snapback provision in which tariffs are reinstated if there are considerable shifts in price and import volume. Tariffs also suffered a gradual decrease as a result of the Uruguay Round Trade Talks in 1994. It was negotiated that the FCOJ tariffs decrease in equal increments, finally totaling 15 percent, after a period of six years.

Currently, Florida citrus growers are again forced to defend the citrus tariff that protects their livelihood. If the Florida citrus industry is to remain a viable $9 billion economic engine to Florida and continue to employ nearly 76,000 people, the current citrus tariff must not be altered in future trade agreements.