For decades, the U.S. closed its doors to Mexican avocados; Today it needs it to meet its growing demand

2019 will see record imports of Mexican avocados into the United States: almost 90% of the one million tons of avocados consumed by Americans will come from the neighboring country, which leads the world in production. After being banned for decades in the U.S. – alleging phytosanitary issues, especially invoked by California producers – the creation of the North American Free Trade Agreement opened the doors of the U.S. market to this Mexican product, first with reservations and since 2007 without restrictions. The arrival of Trump to the presidency marked a decline in imports, but since then they have not stopped rising.

▲ Interest in healthy food has led to an increase in avocado consumption around the world

article / Silvia Goya

Social trends such as veganism or "real fooding" have increased the global production of avocados, a fruit valued for its healthy fat and vitamin content, which enlivens a multitude of dishes. In the United States, moreover, the food tradition of millions of Hispanics – the avocado is born from a tree native to Central and South America (Persea americana) – has encouraged the consumption of a product that, like few others, marks relations between the United States and Mexico.

The department The U.S. Department of Agriculture (USDA) predicts that in order to meet the growing national consumption of avocados (which has multiplied by 5.4 since 2000, from 226,000 tons to 1.2 million in 2018), in 2019 the country will have to increase its imports significantly, so that they will constitute 87% to 93% of the country's economy. availability of product. This will mean an increase in imports from Mexico, which in 2018 already contributed 87% of avocados from abroad. This need for imports is due in part to production problems in California, the state with the highest production in the US (around 80%), well ahead of the second, Florida, and a major litigator in the past to prevent the production of the skill of the Mexican avocado.

Donald Trump's first year in the White House saw a slight decrease in Mexican avocado imports, which in 2017 fell to 774,626 tons. However, in 2018 a new record was reached, with 904,205 tons, with an increase of 17%, in a context of non-materialization of the trade threats launched by the Trump Administration, which finally agreed to the renewal of the free trade agreement with Mexico and Canada. Last year, imports from Mexico accounted for 87% of total avocado purchases abroad; the rest, up to 1.04 million tonnes, corresponded to those from Peru (8%), Chile (2.5%) and the Dominican Republic (2.5%).

History of a veto

The B The rise in avocado sales in the U.S. has attracted the attention of drug cartels, which have clashed to control the business in some Mexican states such as Michoacán – the major producer of avocados, especially of the Hass variety, which is the most commercialized – giving rise to a "new drug trafficking." However, the history of controversy between the two countries over this berry goes back a long way. It was in 1914 that the then U.S. Secretary of Agriculture signed a notice A quarantine decree declaring the need to ban the import of avocado seeds from Mexico due to a weevil that the seed carried. In 1919 the "Quarantine of Nurseries, Plants and Seeds" was enacted. That framework was in place for decades.

During the 1970s, the discussion of the entrance of Mexican avocados in the U.S. market remained in the political spotlight due to the insistence of officials from Mexico's Plant Health Service. Investigations in several Mexican avocado-producing states, however, found weevils in some of the seeds, which did not allow the regulatory policy of the Animal and Plant Inspection Service (APHIS) to be changed. department U.S. Department of Agriculture. For this reason, in 1976 the USDA, in a letter addressed to its Mexican counterpart, stated that it should continue "as in the past, against the issuance of permits for the importation of avocados from Mexico."

Following these events, U.S. policy on avocados from neighboring China remained restrictive until trade liberalization and harmonization of sanitary and phytosanitary measures began to change the context in which governments examined plant health and import issues. For most of the twentieth century, the policy of protection had been to deny access to products that could harbor pests; In the last decade, however, the rules began to change.

The creation of the North American Free Trade Agreement (NAFTA) in 1994 and the World Trade Organization in 1995 paved the way for new Mexican requests for access to the U.S. avocado market. Although the goal One of the main aspects of NAFTA was the elimination of tariffs by 2004, and it also provided for the harmonization of sanitary and phytosanitary measures among trading partners. Nonetheless, this free trade agreement explicitly recognizes that each country can establish regulations to protect human, animal, and plant life and health, so when the risk of pest infestation is high, the country has legitimacy to put restrictions on trade.

With the implementation of NAFTA in 1994, the U.S. government came under increased pressure to facilitate the importation of agricultural products from Mexico, including avocados. This led to a shift in USDA's phytosanitary policy toward a new "mitigation or technological solutions" policy. APHIS is the branch of government in charge of implementing the phytosanitary provisions of NAFTA in the case of the United States. This body considered that fruit flies – present in a wide variety of species – could also be found in Mexican avocados, so officials from Mexico's Plant Health Service had the difficult task of proving that this insect was not present in their avocados and that those of the Hass variety were not susceptible to attack by the Mexican fruit fly. Between 1992 and 1994, Mexico submitted two plans for work with their respective investigations. The former was rejected while the latter, despite pressure from the California Avocado Commission (CAC), was accepted.

This second plan called for Mexican avocado access to 19 of the 50 U.S. states during the months of October through February. At the end of June 1995, the USDA issued a proposal of rule which described the conditions under which Hass avocado grown on approved plantations in Michoacán could enter the U.S. It was at the end of 1997 that the USDA published a rule authorizing the importation of these avocados to the United States. This was the first time the USDA used the so-called "approach systems" to manage the risks posed by quarantine pests.

At the end of the second shipping season, in February 1999, Mexico requested the expansion of the programme to increase the issue of U.S. states to which it could export and allow the shipping season to start a month earlier (September) and end a month later (March). In 2001, the USDA met with the Mexican Plant Health Service and agreed to consider expanding the importing states to 31 and import dates from October 15 through April 15. The good relationship established between Presidents George W. Bush and Vicente Fox had a clear influence on this expansive movement.

Imports in tonnes. In 2018, imports of 1.04 million tonnes (87% from Mexico) [source: USDA]

Liberalization

For five years, Mexican avocados had been shipped to the U.S. without detecting a single pest. Although the expansion of Mexican avocado imports seemed inevitable, the CAC filed a lawsuit against the USDA from California, alleging that Mexican avocados did have pests. In response to this, the USDA carried out a research and published in 2003 a draft from "assessment pest risk" which confirmed that Mexican avocados did not carry the fruit fly.

The USDA had shifted from its previous position of domestic protection to a new position that benefited imports. Thus, in 2004 the USDA issued a new rule to expand the import program to all 50 states for 12 months of the year. This rule It envisaged that in California, Florida and Hawaii the importation of avocados would be delayed for up to a year in order to test the effectiveness of the proposed regulations. Therefore, until January 2007, Mexico was not allowed to export avocados to California and Florida; Since then, it has been allowed to export to all states year-round, quickly making the U.S. the world's largest importer of Mexican avocados.

Until 2017, the import of Mexican avocados remained stable; However, as previously indicated, with the arrival of Trump to the White House, relations between the US and Mexico once again faltered around various issues, one of them being the export of food from Mexico to the US, with avocados as an emblematic case. The new U.S. president threatened a 20% tariff on Mexican avocados to finance the wall he intended to build on the border.

In June 2018, Trump again threatened to impose a 25% tariff on avocados, and later in May 2019 threatened to impose a 5% tariff on all goods from Mexico.

In March 2019, when the migratory wave occurred, the US president threatened to close the border with Mexico and consecutively withdrew his decision, however, the simple fact that Trump threatened to close the border has already caused the price of avocados to rise by 34%.

U.S.-Mexican avocado relations remain unstable. Although much progress has been made since the implementation of NAFTA, various interests are still at stake that could lead the US to reduce the import of Mexican avocados. It is difficult for avocados to escape the uncertainty inherent in the bond between the United States and Mexico.

essay / Jairo Císcar Ruiz [English version].

In recent months, the open trade hostilities between the United States of America and the People's Republic of China have dominated the main general headlines and specialized economic publications around the world. The so-called "trade war" between these two superpowers is nothing more than the successive escalation of the imposition of tariffs and special levies on original products and manufactured goods from the countries in confrontation. This, in economic figures, means that the US imposed in 2018 special tariffs on US$250 billion of imported Chinese products (out of a total of US$539 billion), while China for its part imposed tariffs on 110 out of US$120 billion of US import products [1]. These tariffs meant an increase of US$3 billion in additional taxes for American consumers and businesses. This analysis is therefore intended to explain and show the position and future of the European Union in this trade war in a general way.

This small reminder of the figures illustrates the magnitude of the challenge for the global Economics posed by this clash between the world's two economic locomotives. It is not China who is paying the tariffs, as Trump literally said on May 9 during a meeting with journalists [2], but the reality is much more complex, and, evidently, as in the case of the inclusion of Huawei in the trade blacklist (and therefore the prohibition to purchase any item on US soil, whether hardware or software, without a prior agreement with the Administration), which may affect more than 1.200 American companies and hundreds of millions of customers globally according to the BBC [3], the economic war may soon start to be a great burden for Economics globally. On June 2, Pierre Moscovici, European Commissioner for Economic Affairs, predicted that if the confrontation continues, both China and the USA could lose between 5 and 6 tenths of GDP, stressing in particular that "protectionism is the main threat to world growth" [4].

As can be inferred from Moscovici's words, the trade war is not only of concern to the countries directly involved in it, but is closely followed by other actors in international politics, especially the European Union.The European Union is the largest Single Market in the world, this being one of the premises and fundamental pillars of the EU's very existence. But it is no longer focused on internal trade, but is one of the major trading powers for exports and imports, being one of the main voices advocating healthy trade relations that are of mutual benefit to the different economic actors at global and regional level. This openness to business means that 30% of the EU's GDP comes from foreign trade and makes it the main player when it comes to doing import and export business. To illustrate briefly, from agreement with the data of the European Commission [5] in the last year (May 2018-April 2019), the EU made imports worth €2,022 billion (a growth of 7%) and exported 4% more, with a total of €1,987 billion. The trade balance is therefore a negative balance of €35 billion, which, due to the large volume of imports and exports and the nominal GDP of the EU (taking the figure of 18.8 trillion euros) is only 0.18% of the EU's total GDP. The USA was the main place of export from the EU, while China was the first place of import. These data are revealing and interesting: an important part of the EU's Economics depends on business with these two countries and a bad performance of their Economics could weigh down the EU member countries' own.

Another data that illustrates the importance of the EU in subject trade is that of Foreign Direct Investment (FDI). In 2018, 52% of global FDI came from countries within the EU and the EU received 38.5% of total investment globally, leading on both indicators. It can therefore be said that the current trade war may pose a serious problem for the future European Economics , but, as we will see below, the Union can emerge strengthened and even benefit from this status if it manages to mediate well between the difficulties, businesses and strategies of the two countries. But let us first look at the EU's relations with both the US and China.

The US-EU relationship has traditionally been (albeit with ups and downs) the strongest in the international sphere. The United States is the main ally in defense, politics, Economics and diplomacy of the European Union and vice versa. They share the economic, political and cultural model , as well as the main world collective defense organization, NATO. However, in the so-called transatlantic relationship, there have always been clashes, accentuated in the recent times of the Obama Administration and habitual with Trump. With the current Administration, not only have reproaches to the EU arisen within NATO (regarding the failure of member countries to invest the required budget ; shared criticism with the United Kingdom), but a full-fledged tariff war has begun.

In barely two years we have gone from the TTIP (Transatlantic Trade and Investment Partnership) negotiations, the announced basis for 21st century trade that finally failed in the final stages of Obama in the White House, to the current status of extreme US protectionism and EU response. Particularly illustrative is the succession of events that have taken place in the last year: at the stroke of Twitter, in March 2018 the US unilaterally imposed global tariffs on steel (25%) and aluminum (10%) to protect American industry [6]. These tariffs did not only affect China, they also inflicted great damage on companies in European countries such as Germany. Tariffs of 25% on European vehicles were also in the air. After a harsh climate of mutual reproaches, on July 25, Jean Claude Juncker, President of the European Commission, announced together with Trump a agreement to lower tariffs on agricultural products and services, and the US committed itself to review the imposition of metallurgical tariffs on the EU, as well as to support within the World Trade Organization the European calls for a reform of Intellectual Property laws, which China does not respect [7]. However, after the reiteration of the transatlantic friendship and Trump's advertisement of "we are heading towards zero tariffs" [8], soon the intemperate boxes have been rung again. In April this year, on April 9, Trump announced on Twitter the imposition of tariffs on the EU worth US$11 billion for the EU's support to Airbus (skill of the American Boeing, Lockheed Martin...), blowing up the principle of agreement of July last year. The EU, for its part, threatened to impose tariffs of €19 billion for the US state support to Boeing. As can be seen, the EU, despite its traditional conciliatory role and often subjugated to the US, has decided to fight back and not allow any more outbursts on the American side. The latest threat, in mid-July, is against French wine (and due to the European mechanism, against all wines of European origin, including Spanish wines). This threat has been described as "ridiculous" [9], since the USA consumes more wine than it produces (it is the world's largest consumer) and therefore, the supply available could be considerably reduced.

It is still too early to see the real impact that the trade war is having on the US, beyond the 7.4% drop in US exports to China [10] and the damage that consumers are suffering, but the Nobel laureate of Economics Robert Schiller, in an interview for CNBC [11] and the president of the World Trade Organization, Roberto Azevedo, for the BBC; have already expressed their fears that if status and protectionist policies continue, we could be facing the biggest economic crisis since the end of the Second World War. It is difficult to elucidate what the future relationship between Europe and its main exporter partner , the USA, will be like. All indications are that friction and escalation will continue if the US Administration does not decide to tone down its rhetoric and actions against free trade with Europe. Finally, it must be clear (and in the spirit of lowering the sometimes excessively alarmist tone of the news) that between the threats (either by Twitter or spokespersons) from both sides and the actual imposition of tariffs (in the US after the relevant advertisement from the Office of the US Trade Representative; in the EU through the approval of the 28) there is a long way to go, and we must not confuse potential acts and facts. It is clear that despite the harsh tone, the negotiating teams on both sides of the Atlantic are still at contact and are trying to avoid as far as possible actions detrimental to both sides.

On the other hand, the relationship between China and Europe is frankly different from the one with the USA. The Belt and Road Initiative (BRI) (to which Italy has formally adhered) is the confirmation of China's bid to be the next leader of the world's Economics . Through this initiative, President Xi Jinping aims to redistribute and streamline trade flows to and from China by land and sea. To this end, the stability of South Asian countries such as Pakistan and Afghanistan is vital, as is the ability to control vital maritime traffic points such as the Strait of Malacca and the South China Sea. The Asian "dragon" has an internal status that favors its growth (6.6% of its GDP in 2018 which, being the worst figure for 30 years, is still an overwhelming figure), as the relative efficiency of its authoritarian system and, especially, the great support of the State to companies boost its growth, as well as possessing the largest foreign currency reserves, especially dollars and euros, which allow a great stability of the country's Economics . The Chinese currency, the Renminbi, has been declared by the IMF as a world currency reservation , which is another indicator of the good health that is predicted for the future of the Chinese Economics .

For the EU, China is a competitor, but also a strategic partner and a negotiator partner [12]. China is the EU's main importer partner , accounting for 20.2% of imports (€395 billion) and 10.5% of exports (€210 billion). The volume of imports is such that, although the vast majority reach the European continent by sea, there is a railway connection that, under the BRI, links the entire Eurasian continent, from China's manufacturing capital, Yiwu, and the last stop at the southernmost tip of Europe, Madrid. Although some of the imports are still so-called "low-end" goods, i.e. products of basic manufacture and cheap unit price, since China joined the WTO at entrance in December 2001, the concept of material produced in China has changed radically: the great abundance of rare earths in Chinese territory, together with the progress in its industrialization and investment in new technologies (in which China is a leader) have meant that China is no longer thought of only as a mass producer of bazaars; on the contrary, the majority of imports into the EU from China were high-end, high-tech machinery and products (especially telecommunications and processing equipment from data).

In the aforementioned statement press release from the European Commission, China is warned to comply with the commitments made in the Kyoto Protocols and Paris Agreements regarding greenhouse gas emissions; and urges the Asian country to respect the dictates of the WTO, especially in subject on technology transfer, state subsidies and illegal practices such as dumping.

These aspects are vital for economic relations with China. At a time when most countries in the world signed or are part of the Paris Agreements for the reduction of greenhouse gas emissions, while the EU is making efforts to reduce its pollution (closing coal plants and mines; putting special taxes on energy obtained from non-renewable sources...), China, which totals 30% of global emissions, increased in 2018 by 3% its emissions. This, beyond the harmful effects for the climate, has industrial and economic benefits: while in Europe industries are narrowing their profit margins due to the rise in energy prices; China, which is fueled by coal, provides cheaper energy to its companies, which, without active restrictions, can produce more. An example of how the climate affects economic relations with China is the recent advertisement [13] of AcerlorMittal to reduce by 3 million tons its total steel production in Europe (out of 44 million tons of usual production) due to high electricity costs and increased imports from countries outside the EU (especially China) which, with excess production, are lowering prices worldwide. This internship, which is especially used in China, consists in flooding the market with an overproduction of a certain product (this overproduction is paid with government subsidies) to lower prices. As of December 2018, in the last 3 years, the EU has had to impose more than 116 sanctions and anti-dumping measures against Chinese products [14]. Which sample that, despite the EU's attempts to negotiate on mutually satisfactory terms, China does not comply with the stipulations of the agreements with the EU and the WTO. Particularly thorny is the problem with government-controlled companies (a ban on 5G networks in Europe, controlled by Chinese providers, is being considered for security reasons), which have a virtual monopoly inside the country; and above all, the distorted reading of legality by the Chinese authorities, who try to use all possible mechanisms in their favor, making it difficult or hindering direct investment by foreign capital in their country, as well as imposing requirements (need to have Chinese partners, etc.) that hinder the international expansion of small and medium-sized companies. However,

The biggest friction with the EU, however, is the forced transfer of technology to the government, especially by companies of strategic products such as hydrocarbons, pharmaceuticals and the automotive industry [15], imposed by laws and conditio sine qua non companies cannot land in the country. This creates a climate of unfair skill and direct attack on international trade laws. The direct investment of Chinese capital in critical industries and producers in the EU has caused voices to be raised calling for greater control and even vetoes on these investments in certain areas due to Defense and Security issues. The lack of protection of intellectual rights or patents are also important points of complaint by the EU, which aims to create through diplomacy and international organizations a favorable climate for the promotion of equal trade relations between the two countries, as reflected in the various European guidelines and plans concerning topic.

As we have seen, the trade war is not only limited to the US and China, but third parties are suffering from it and even actively participating in it. The question arises here: can the EU benefit in any way and avoid a new crisis? Despite the pessimistic mood, the EU can derive multiple benefits from this trade war if it manages to maneuver properly and avoid as far as possible further tariffs against its products and keeps the market open. If the trade war continues and the positions of the US and China harden, the EU, being partner the main beneficiary of both, could benefit from a redistribution of trade flows. Thus, to avoid the loss due to tariffs, both China and the US could sell heavily taxed products to the European market, but especially import products from Europe. If a agreement is reached with the US to lift or minimize tariffs, the EU would find itself facing a huge market niche left by Chinese products vetoed or taxed in the US. The same in China, especially in the automotive sector, from which the EU could benefit by selling to the Chinese market. Alicia Garcia-Herrero, of the Belgian think tank Bruegel, states that the benefit for Europe will only be possible if it does not lean towards any of the contenders and remains economically neutral [16]. He also stresses, like the European Commission, that China must adopt measures to guarantee reciprocity and market access, since the European Union still has a greater volume of business and investments with the USA, so that the Chinese offer should be highly attractive for European producers to consider directing products to China instead of the USA. The UN itself estimates at US$70 billion the benefits that could be absorbed by the EU thanks to the trade war [17]. Definitely, if the right measures are taken and the 28 draw up an adequate road map, the EU could benefit from this war, without forgetting that, as the EU itself advocates, coercive measures are not the solution to the trade problem, and hopes that, due to their ineffectiveness and damage caused to both consumers and producers, the tariff war will come to an end and, if differences persist, they will be resolved in the WTO Appellate Body, or in the Permanent Court of Arbitration of the United Nations.

This trade war is a highly complex and nuanced topic ; this analysis has attempted to address many of the issues, data and problems facing the European Union in this trade war. It has been generally analyzed what the trade war consists of, as well as the relations between the EU, China and the USA. We are facing a gray future, with the possibility of multiple and quick turns (especially on the part of the US, as seen after the G20 summit in Osaka, after which it has allowed the sale of components to Huawei, but has not removed the company from its blacklist) and from which, if the requirements and the conditions set out above are met, the EU will definitely benefit, not only economically, but if it remains united and making a common front, it will be an example of negotiation and economic freedom for the whole world.

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