Florida citrus growers, alarmed about South Korea squeezing their business, are pushing U.S. officials to settle a tariff dispute they say is costing them millions of dollars in sales. The fight, which began last year, centres on U.S. exports of frozen orange-juice concentrate to South Korea and comes while the industry is struggling with a devastating plant disease called citrus greening.
For years, South Korea had levied a 54 percent tariff on the product, making sales prohibitively expensive and keeping U.S. exports low. But under a trade agreement that took effect two years ago, the tariff disappeared, leading to an explosion in U.S. business. Exports of frozen orange-juice concentrate to South Korea jumped from $11 million in 2011 to $30 million in 2012, according to the U.S. Department of Agriculture.
It was a promising expansion for the $9 billion Florida citrus industry, which grows the majority of oranges used in U.S. juice, including concentrate. The good times didn't last long, however. Last spring, about a year after the free-trade agreement took effect, customs officials in South Korea began to scrutinize the concentrate coming into the country and questioned the source of oranges in the frozen-juice mix.
Under the agreement, only concentrate made exclusively from U.S. oranges is allowed to skirt the tariff, and South Korean officials suspected some of the oranges blended into the concentrate were from another country. "Oranges that came in from Brazil and then went to Korea wouldn't qualify," said Mike Sparks, CEO of Florida Citrus Mutual, a trade group.
Sparks said American citrus companies have provided proof that the concentrate going to South Korea is solely of U.S. origin, but to little avail. What's worse, he said, is that Seoul has threatened to retroactively seek tariffs on past sales if customs officials find evidence that foreign oranges were used in the concentrate.
The tough tactics have made U.S. exporters reluctant to ship concentrate to South Korea. Overseas sales have fallen by millions of dollars since last spring, said Sparks, though neither he nor government officials provided specific figures.
