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Steel tariff repeal good news to LRGV

Prior to the repeal, the 15-nation European Union had drawn up a $2.2 billion tariff retaliation list that targeted a wide range of American products, including $150 million on U.S. fresh fruits.

"This is a huge issue for Texas grapefruit juice, since about one-half of our grapefruit juice is marketed in Europe," said Ray Prewett, president of Texas Citrus Mutual in Mission.

Last year, the Valley's citrus industry marketed approximately 80,000 tons of grapefruit juice, half of which was sold in Europe.

"We currently pay a 12-percent tariff for our product going to this market. Many of our competitors pay a lesser amount, and in some cases no tariff at all," said Prewett. "The additional 15 percent tariff coming from the retaliation would have made our grapefruit juice uncompetitive in the European market."

On Nov. 25, Prewett sent letters on behalf of TCM to President Bush and the Texas Congressional delegation urging the president to drop the tariff.

"We urged both sides to find a solution to the trade tariff before it broke out into a major trade war, and we're glad they did," Prewett said. "France and other European countries are very important markets for us, and we're very relieved we can put this issue behind us."

Shortly after the president announced that the tariffs would expire at midnight, Dec. 4, the European Union announced it too was withdrawing its $2.2 billion list of targeted products, including fruit.

Bush imposed the import tariffs last year to help the struggling U.S. steel industry. Ending the tariff appears to have avoided an all-out trade war not just with Europe, but also with Japan, Brazil and other countries that would have been part of the retaliatory sanctions against U.S. products.

"It's relieved some anxiety," said Julian Sauls, citrus specialist at the Texas A&M University System Agricultural Research and Extension Center at Weslaco. "With the threat of the European boycott over, Florida can continue sending them its fresh fruit and the Valley can continue sending its grapefruit juice."

Sauls said losing the European market would have worsened an already weak grapefruit juice market.

"If we'd suddenly lost that market, there aren't many other places to sell it. Growers would have lost more money on the fruit that goes to juice than they normally lose. Instead of having a one-year glut, we would have had a two-year glut."

Sauls said Valley grapefruit that doesn't rate the premium No. 1 or No. 2 grades for fresh fruit markets is sold as juice concentrate and, after harvesting and production costs are deducted, is usually a money loser for growers.

"Generally speaking for growers, No. 1 grade grapefruit makes money, No. 2 breaks even, and fruit that goes to make concentrate costs growers. A boycott by Europe on our juice would have just made matters worse.

Rod Santa Ana III is a writer for the Texas A&M University Extension Service.


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