The U.S., traditionally a net exporter of fruits and vegetables,
has become a large net importer, with imports more than doubling
between 1994 and 2004 to reach $12.7 billion. U.S. exports of fruits
and vegetables have also risen but less rapidly, reaching $9.7 billion
in 2004. The surge in imports can be traced to a growing consumer
demand for produce from tropical regions, produce that complements
U.S. seasonal patterns of production, and produce that competes
directly with U.S. production. Because of geographic proximity and
low or zero tariffs, Canada and Mexico are among the largest sources
and destinations of U.S. trade of fruits and vegetables.
U.S. produce exports are growing more slowly than imports partly
because they are constrained by high tariffs and slow economic growth
in importing countries. The global average tariff for the fruit
and vegetable sector is over 50 percent, with tariffs varying substantially
across products and countries. In general, the United States maintains
lower tariffs than most of its trading partners. Nearly 60 percent
of U.S. tariffs on produce are less than 5 percent, and over 90
percent are under 25 percent. Countries belonging to the Organisation
for Economic Co-operation and Development (OECD), which together
import about 85 percent of the value of world fruit and vegetable
trade, are characterized by a relatively large number of low tariffs
and a small number of very high tariffs. For example, most Japanese
and European Union fruit and vegetable tariffs range from 5 to 25
percent. In contrast, over half of all official tariffs of non-OECD
countries exceed 25 percent, although in practice, non-OECD developing
countries tend to maintain lower tariffs.
Market forces and government policies also are key factors shaping
U.S. fruit and vegetable trade. The recent decline in the dollar—down
about 11.6 percent in real terms since 2002 against a basket of
horticultural trading partners—has made American fruits and
vegetables relatively less expensive than those of most U.S. competitors
in importing countries. The main exception is China, which has maintained
a fixed exchange rate with the dollar, and China’s horticultural
products have begun to compete head-on with U.S. products in important
third-country markets such as Japan. Partly in response to growing
international competition, in December 2004, Congress passed the
Specialty Crops Competitiveness Act, which (although not currently
funded) authorizes promotional campaigns and technical and financial
assistance designed to enhance the competitiveness of U.S. fruits
and vegetables. Additionally, ongoing World Trade Organization negotiations,
as well as regional and bilateral trade agreements, may lead to
reductions in tariff and nontariff measures faced by U.S. fruit
and vegetable growers in global markets.
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