The U.S. Orange Juice Tariff and the 'Brazilian Invasion' of Florida
Hart, Ezequiel O.
- Submitted in partial fulfillment of the degree Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: The Florida citrus industry has always been buffered from overseas competition by a U.S. tariff on orange juice. During the 1990s four Brazil-based orange juice processors (BBPs), including the two dominant orange juice exporters in the world, purchased plants i... read moren Florida. By the beginning of the current decade the four companies controlled nearly half the processing capacity in the state. The orange juice tariff is currently threatened by negotiations over the FTAA (which is scheduled to enter into force by January 2005), as well as in the WTO. As a prominent participant in these negotiations, Brazil is demanding U.S. concessions in agriculture, including specifically the orange juice tariff. While the industry has defeated attempts to reduce or eliminate the tariff in the past, never before have foreign companies, which would benefit from a removal of the tariff, been significant actors within the industry. This paper investigates the role that the BBPs are playing and could still play in the debate over the orange juice tariff. The first analytical section of the paper investigates the motivations for the BBPs' FDI in Florida. The paper then analyzes the industry's competitive landscape, and finds that the BBPs have accelerated the downstream consolidation of the value chain. Next, the possible effects of tariff elimination are discussedwith a conclusion that the industry would be hurt, but not destroyed. The final section tests the hypothesis that the entry of the BBPs into Florida has increased the likelihood of a U.S. concession on the tariff. It concludes that the BBPs have not inserted themselves into the political mix for several reasons, including ambivalence (due to vested interests), a fear of anti-foreigner sentiment, and a scarcity of nonmarket strategic resources. In the conclusion, the paper speculates on the future of the tariff debate and discusses broader implications emanating from this case.read less