Roses One-Pager

ECUADORIAN FRESH CUT ROSES UNDER GSP Ecuador has a Significant Market Share of the Fresh Cut Roses Industry  Ecuador supplied 26% of U.S. cut rose imports in 2011 ($94.119 million). Ecuador supplied 24% ($80.4 million) of fresh cut rose imports between January and October of 2012.1  According to the USTR, fresh cut flower imports constituted 48% of all non-oil imports from Ecuador under the Andean Trade Preferences Act (ATPA). Fresh cut rose imports are 62.1% of all flower imports from Ecuador to the U.S.2  A tariff on Ecuadorian fresh cut roses has the potential to significantly reduce the quantity of roses imported to the U.S., increasing prices of fresh cut roses for U.S. consumers.3  If fresh cut roses are not admitted into the GSP program, a majority of Ecuadorian producers will be forced to reduce or cut their exports to the U.S. In a market that already has a limited supply; a reduction in production will increase prices to the U.S. consumer4 and increase dependency on the Colombian competitors in the industry.  Ecuadorian production takes place in smaller scale and specialized farms thus allowing Ecuador to provide the wide variety and high quality product that is demanded by American businesses and consumers.

Ecuadorian Fresh Cut Roses Benefit the American Economy  In 2011, fresh cut rose imports under ATPA generated the highest consumer surplus, $8 to $9.2 million and a net welfare of $8.6 to $9.1, of any other ATPA product.5  According to the U.S. Bureau of Labor Statistics, in 2011 the industry of florists and flower wholesalers was a $31.1 billion dollar industry6 and generated 68,530 direct jobs.7  For every dollar the final consumer spends on fresh cut roses, approximately 27% remains with rose producers, 6% remains with airlines, and 67% remains with American transportation, wholesale, florists, and designs, and other related American businesses.8  Online florists are a $2 billion industry, which creates 28,972 direct and indirect jobs and consists of over 3,574 direct and indirect businesses.9  The florist industry in the U.S. created 110,242 indirect jobs and supported 36,528 businesses along the entire production chain.10 According to a recent study, the U.S. had 16,182 retail florists which sold $320,000 and 530 wholesalers at a time when the fresh cut flower industry was a $29.6 billion dollar industry.11  There florist industry is not highly concentrated as no one company has more than a 5% market share. It is also highly labor intensive; for every dollar spent on capital investment, about $13.47 are spent on wages.12 The Ecuadorian Rose Industry Supports U.S. Ports and Other Transportation Sectors  About 91.5% of rose imports to the U.S. enter through Miami, FL; 6.3% enter through Los Angeles, CA; 0.8% enter through Laredo, TX; 0.4% enter through New York, NY and 0.3% enter through San Diego, CA.13 Only 0.1% of rose imports enter through Chicago, IL. However, there are project proposals to expand the Chicago airport’s capacity to receive fresh cut flower cargo.  The fresh cut flower import industry in Miami uses 1.4 million square feet of warehouse space, and spends $10 million on insurance and $4 million in office expenses per year.14  The annual payroll for flower importers alone is over $84,000,000.15  Ecuadorian exporters spend $26.7 million in American companies that provide transportation and logistics services. There are about 4,6000 trucks that transport the product from the airport to Illinois are two large distribution centers. Roses are also taken by truck to their final destination across the country.16  Ecuadorian producers spend and invest in developing rose varieties while respecting intellectual property rights. Ecuadorian producers have invested $20 million in licensing for new varieties in the last 20 years. 17

The Ecuadorian Rose Industry Supports Social Development and Counteracts the Narcotics Trade  The flower industry, led by rose production, was able to develop because of tariff free access to American markets.  The industry has become essential to the Ecuadorian economy and one of the main employers in some of the poorer areas of the country that have little to no economic alternatives and are at risk of the narcotics trade. This is the case with the region of Tabacundo, Pichincha, the province of Cotopaxi, and the border province of Carchi.  USTR estimated that each rose producer plans to individually invest between $150,000 and $38 million.

The report also finds that many producers had cut job opportunities and reduced expenses in other ways due to the uncertainty surrounding a renovation of the ATPA.18  Flowers accounted for approximately 8.77% of non-petroleum exports in 2011.19  The Ecuadorian flower industry generates 30,000 local jobs in Ecuador, 50.7% of these employees are women.20 All other Suppliers have Marginal Market Participation or Benefit from FTAs  Ethiopia, Kenya, South Africa, and Tanzania are the only Least Developed Beneficiary Developing Countries (LDBC) that produced fresh cut roses in the last three years. Long distances, cold chain management, infrastructure, high transportation costs, and undeveloped networks prevent flowers from these countries from being competitive in the U.S.21 These barriers exist independent of Ecuadorian presence in the market. Adding fresh cut roses to the GSP list of eligible items for all eligible countries will not have an effect on LDBC.  Kenya: 0.7% of fresh cut rose imports to the U.S. came from Kenya and were 0.71% of Kenyan exports to the U.S. 22,23  Ethiopia: Ethiopia supplied only 0.1% of the roses imported to the U.S. in 2011. Rose exports to the U.S. were only 0.14% of Ethiopian exports in 2011.24 About $2.7, or 90%, of Ethiopian rose exports were received by Holland. 25 Ethiopian roses have a market share of 20% imports to Holland. 26  Tanzania: Only 0.003% of flower imports to the US in 2011 were from Tanzania.27 Roses were 0.02% of Tanzanian exports to the U.S.28 The majority of Tanzanian exports enter the European Union through flower markets in Holland.29  Uganda: Only 0.001% of total rose imports to the U.S. in 2011 were from Uganda.30 Also, roses only comprised 0.01% of Ugandan exports to the U.S.31

U.S. International Trade Commission, Trade Database: US Imports for Consumption at Customs Value for HTS8 06031100.

2 U.S. International Trade Commission, Andean Trade Preference Act: Impact on U.S. Industries and Consumer and on Drug Crop Eradication and Crop Substitution, 2011, Investigation No. 332-352 Publication 4352 (Sept. 2012).

3 Id. The U.S. International Trade Commission indicates that the number of acres of seeds planted has been reduced by the crisis in 2008-2009.

4 Request by ExpoFlores for Addition of Ecuadorian Fresh Cut Roses to GSP, p. 17 (Oct. 5, 2012).

5 U.S. International Trade Commission, Andean Trade Preference Act: Impact on U.S. Industries and Consumer and on Drug Crop Eradication and Crop Substitution, 2011, Investigation No. 332-352 Publication 4352 (Sept. 2012).

6 U.S. Bureau of Economic Analysis (May 2012).

7 Bureau of Labor Statistics, NAICS 453100, Florist Facts, www.bls.gov/oas/current/naucs4_453100.htm#00-0000.

8 Id. at p. 18.

9 Online Flower Shops in the US, Market Research Report, IBIS World (Feb. 2012), http://www.ibisworld.com/industry/online-flower-shops.html 10 Florists Market Research Report, NAICS 45311, IBIS World, (Feb. 2012), http://www.ibisworld.com/industry/default.aspx?indid=1096 11 Society of American Florist, aboutflowers.com.

12 Florists Market Research Report, NAICS 45311, IBIS World (Feb. 2012), http://www.ibisworld.com/industry/default.aspx?indid=1096.

13 U.S. International Trade Commission, Trade Database: US Imports for Consumption at Customs Value for HTS8 06031100.

14 South Florida Industry Statistics, http://www.afifnet.org/south_floridia_stats.html.

15 South Florida Industry Statistics, http://www.afifnet.org/south_floridia_stats.html.

16 Request by Explores for Addition of Ecuadorian Fresh Cut Roses to GSP (Oct. 5, 2012).

17 Id. 18 Id. 19 Information available at: http://www.proecuador.gob.ec/wpcontent/uploads/downloads/2012/03/PROECUADOR_IC_02-14.pdf.

20 Id. 21 USTR, 2008 Comprehensive Report on U.S. Trade and Investment Policy toward Sub-Saharan Africa and Implementation of African Growth and Opportunity Act, p.19.

22 U.S. International Trade Commission, Trade Database: U.S. Imports for Consumption at Customs Value for HTS8 06031100.

23 U.S. International Trade Commission, U.S. Imports for Consumption at Customs Value from Ethiopia.

24 U.S. International Trade Commission, Trade Database: U.S. imports for Consumption at Customs value for HTS8 06031100.

25 Roses bring jobs to Ethiopia, Ethiopian Flower Export (June 2, 2012), http://ethiopianflowerexport.com/rosesbring-industry-jobs-to-ethiopia/.

26 Shoots, Greens, and Leaves, The Economist (June 16, 2012), http://www.economist.com/node/21556904.

27 U.S. International Trade Commission, Trade Database: U.S. imports for consumption at Customs value for HTS8 06031100.

28 U.S. International Trade Commission, Imports for Consumption at Customs Value from Ethiopia.

29 Workshop to Increase Tanzanian Food Exports to the United States under AGOA, Embassy of the United States in Daressalaam (2008), http://tanzania.usembassy.gov/pr_01092008.html.

30 U.S. International Trade Commission, Trade Database: U.S. imports for consumption at Customs Value for HTS8 06031100.

31 U.S. International Trade Commission, Imports for Consumption at Customs Value from Ethiopia.

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