Trade in Real Life: Free Trade Agreements Provide Fertile Soil for Blossoming Markets

pa href=https://www.cato.org/people/gabriella-beaumont-smith hreflang=enGabriella Beaumont-Smith/a
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pIt’s my goal with this series to plug trade into your mind using stories about relatable products. Here in DC, the cherry blossoms are in full bloom, and since the beginning of last week marked spring, flowers seemed an apt topic./p
pMuch of my work focuses on emprotectionist/em trade policies, but the story behind flowers is much cheerier. Flowers received extensive trade liberalization, primarily through the U.S.-Colombia free trade agreement, which entered into force in 2012. Colombia has been the U.S.‘s top trading partner for flowers since at least 1989, but before the agreement, Colombian flower imports were subject to high U.S. tariffs. The agreement removed tariffs on flowers and cut flower trade boomed. Between 2012 and 2022, U.S. flower imports almost doubled, as shown in the chart. However, the U.S. also liberalized flower trade with other countries, and out of the top 10 trading partners for cut flowers in 2022, the U.S. has free trade agreements with seven. As a result, overall flower imports increased from around $968 million in 2012 to almost $2 billion in 2022./p
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/ppWhile trade liberalization with Colombia made flower imports cheaper, tariff reduction is not the only reason flowers are more affordable. Colombia has a comparative advantage in flower production. This means that Colombia can produce flowers more efficiently than the United States. As a result, it produces flowers more cost effectively, which translates into savings for Americans. For example, until the 1980s, the majority of a href=https://www.cato.org/blog/valentines-day-full-chocolate-roses-tariffsspanspanroses/span/span/aspanspanspanspanspanspanspan sold in the U.S. were grown in California and a dozen roses cost around $150. Today, most roses are imported (57 percent and 40 percent came from Colombia and Ecuador, respectively in 2022) and you can buy a dozen for as little as $8.99. (Although, it’s not all sunshine and roses (ha) because the U.S. does not have a free trade agreement with Ecuador, and so Ecuadorian roses are subject to a 6.8 percent tariff per stem.)/span/span/span/span/span/span/span/p
pAs you shop for flowers to brighten your home or send a bouquet as a gift, remember that free floral trade provides you with more options at different prices./p