Sunkist Protests European Subsidies and Trade Practices; Cooperative Questions EU Subsidies for Clementine Oranges and Lemons.

Business Editors

SHERMAN OAKS, Calif.--(BUSINESS WIRE)--April 27, 2001

Sunkist Growers, the world's largest citrus marketing cooperative, appealed to the U.S. International Trade Commission (ITC) to investigate European Union trade policies and possible unfair government subsidy practices that have allowed Spanish Clementine oranges and lemons to flood U.S. markets in ever-increasing numbers over the past four years.

Calling on the ITC to "undertake the task of penetrating the curtain that shrouds the governmental subsidies and programs enjoyed by our Spanish competitors," Kam Quarles, director of Sunkist's Washington office, told commissioners imports of the Spanish Clementines have grown 140 percent.

In the Sunkist testimony, Quarles raised questions for the ITC to answer, noting the "distortions that can take place if subsidized foreign product is allowed to inundate the U.S. market."

"Returns to our navel growers have been reduced and our sales are being directly impacted by what appears to be trade distorting practices of the EU," said Michael Wootton, Sunkist's vice president of governmental relations.

"Because of their lack of transparency, we've had only limited success in our efforts to identify and quantify all these subsidies. This has prompted our request for a fact-finding investigation by the ITC."

"The impact of these large quantities of low-priced Clementines ripples through the entire navel orange season. Due to these surges of imports and the marketing chaos they create, we calculate that Sunkist is now missing sales from 200 to 400 loads of product weekly, compared to the 1997-98 season," Quarles stated.

This equates to market losses totaling $12 million to $15 million annually for Sunkist alone.

Tariff rates are another issue. Sunkist noted that the Spanish products enter the U.S. nearly duty free, while U.S. citrus is subjected to an almost 20 percent tariff to enter the EU. "The Spanish enjoy unfettered access to millions of American consumers, while our orange growers are excluded, because of discriminatory tariffs, from reaching European consumers," said Quarles.

Sunkist called on the ITC to investigate the cost factors all growers face and to determine if the Spanish growers are unfairly advantaged by the EU programs.

"Based on what we've seen, we can't understand how their growers can make a living if all the cultural and marketing costs American growers must cover are factored in," said Quarles.

The EU acknowledges billions of dollars are expended each year to help European citrus and other produce industry interests. In contrast, U.S. produce industries receive no comparable help from the U.S. government.

Sunkist listed five areas of focus for the ITC to study:

-- programs that assist Spanish growers and their related packinghouses,
processing, packing and manufacturing facilities and how they provide revenue
back to the grower.

-- average per acre production costs for Clementines in Spain, including
infrastructure, irrigation, pesticides etc.

-- with stand alone, profit-making providers, the cost to move Clementines from
packinghouse to export destinations in the United States.

-- per container or carton cost of shipping the fruit to the United States.

-- packaging and marketing costs for selling Spanish fruit in the United
States.

Sunkist asks the ITC to tabulate these costs against the wholesale price paid by Clementine importers. "With a better understanding of the governmental help afforded our competitors, we will know what we're up against and how to better compete," said Wootton.