The Importance of ATPDEA

When I was working at a flower shop, I seldom paid attention to international treaties and agreements. They never seemed to affect me and the business I was doing day in and day out. Those things were always about something out of my world. All I cared about was what the price of flowers at my local wholesale house. We get frustrated sometimes when we see high prices. We get upset because price is a big deal to us. After walking through greenhouses and talking to not only the owners but workers in Ecuador, there was a constant echo of one major concern, the fear of non-renewal of the Andean Trade Promotion and Drug Eradication Act or simply ATPDEA.

 

 

So what exactly is ATPDEA?

In 1991 President George H.W. Bush enacted the Andean Trade Preference Act (ATPA) that eliminated tariffs on several products coming in from Bolivia, Colombia, Ecuador and Peru. This act was to promote legal crops, as these countries were struggling with drug production and trafficking. In 2002 President George W. Bush renewed the act under the name Andean Trade Promotion and Drug Eradication Act (ATPDEA) which increased the items covered from around 5,600 to approximately 6,300 items. After several renewals throughout the Bush administration the President asked congress to remove Bolivia due to failure to uphold agreements to assist in counter-narcotic efforts in the country.

The ATPDEA allowed for products, and more importantly flowers, to come into the country with no tax and the US increased their exports into all three countries. They exported supplies needed for the cultivation of flowers. It was a Win-Win situation for both countries. There was a boom in Ecuador that allowed for flowers farms to flourish. (See my previous post for some more insight of the effects of rose farms in Ecuador)

In February of 2011 the act expired and the tax was implemented. This caused a ripple affect across the US from wholesale house down to the consumer. Roses incoming from Ecuador were subject to a tax which we at Mayesh absorbed part of. It was a tough few months till negotiations finally renewed the act mid November 2011. The act is currently set up to expire May of 2013.

 

Why is it important to you?

If the ATPDEA is not renewed next year we are in for a huge price hike on all products incoming from Ecuador. Higher prices mean having to change pricing at the local flower shop level and we all know how difficult it is to explain why prices all of a sudden are higher than normal. I remember going through the motions of explaining supply and demand every Valentine’s Day. I am sure many of you have to go through the same thing. It is the only way a shop can survive during the holidays. If they keep their price the same as they do year round they lose their shirt (pardon the expression) that very holiday. Flowers are huge business in this country. If you look at the break down of how much money is generated locally here in the US versus how much money stays in the country of origin it is roughly 80%-90% versus the 20%-10% that stay in the country who produces the product.

“The ATPDEA has provided real benefits for the flower industry in both the United States and Ecuador, as well as for American consumers. There is, however, a risk that the benefits of duty-free flowers from Ecuador will be lost next year. The industry will be working on this in the coming months and we are hopeful that the U.S. Congress will find a way to resolve the issue.”-Ben Powell, COO, CFO Mayesh Wholesale Florist

 

What can you do to help renew ATPDEA?

ATPDEA is a congressional issue. Now that the election is over, you have a way to reach out to our local congressman and senators and tell them why the ATPDEA is important to you. Here are a few links that will help you find contact information.

Find Your Representative

State Senators

 

The post is just a brief overview of the issue at hand. The best thing is to read about ATPDEA and become informed. For more information check out these links;

Wikipedia

International Trade Administration

Office of the United States Trade Representative

 

The issue also has been covered by some other notable blogs.

Ryan Freeman of FlowerChat writes for Real Florists Blog and he did a great post just before heading to Ecuador to meet up with several industry people as well as yours truly.

More info to come from my Ecuador trip so stay tuned.

 

Side note: Hopefully in the coming months we will be offering a letter template that will make contacting your government representatives very easy.

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