Ecuadorian flowers no longer enter the US tax-free

Flower farmers from Ecuador who were used to exporting their blooms to the US duty-free will not look forward to the arrival of August. As of that month they will face a 6.8% import levy, as a result of Ecuador withdrawing from the ATPDEA treaty over political pressure surrounding the asylum request of American whistleblower Edward Snowden.

Ecuador’s critical stance in the face of the demand by the US to not provide Snowden with asylum provoked a lot of anger in America. The threats by leading US political figures reached such intensity, in fact, that Ecuador president Rafael Correa decided to withdraw from the trade pact unilaterally. “Ecuador doesn’t accept pressure or threats from anyone and doesn’t barter its principles and sovereignty or submit to mercantile interests,” he subsequently stated.

The ATPDEA – the Andean Trade Promotion and Drug Eradication Act – is a trade preference policy that guarantees that Andean countries can export their products tax-free to the United States. It was primarily established to provide the countries of the South American region with incentives to develop alternatives to the lucrative but illicit coca trade. The cancellation of the treaty means a 6.8% import tax comes into effect as of August 1.

Ecuador is reportedly now trying to get its flower exports to fall under the United States’ Generalized System of Preferences program instead, which is designed to promote economic growth in the developing world by providing preferential duty-free access in a similar manner to the ATPDEA.

The United States did renew the ATPDEA agreement with Peru and Colombia. The latter country, in particular, also plays a major role in providing the United States with freshly cut flowers and now sees its competitive edge increase.

The free trade agreement between Ecuador and Europe still stands as well.

Sources: VvdB, Bloomberg, Florint.org