Ecuador Reaps Costs Of Anti-Trade Fervor

Teresa Ayala, right, and Rosa Caza, center, lost their jobs when the U.S. owner of the flower farm in Malchingui decided to close it and another farm nearby.
Teresa Ayala, right, and Rosa Caza, center, lost their jobs when the U.S. owner of the flower farm in Malchingui decided to close it and another farm nearby. (By Juan Forero -- The Washington Post)
By Juan Forero
Washington Post Foreign Service
Tuesday, October 24, 2006

MALCHINGUI, Ecuador -- For weeks, the rumor had circulated through the greenhouses and fields of the flower export business here: The American owner was going to abandon the country.

Then the rumor became reality. The owner, a division of the giant Dole Food Co., announced this month that it would close this farm and another in a nearby town, wiping out 850 jobs, as it sought to streamline operations.

"They said it was not a bankruptcy, but that business was not good," said Teresa Ayala, 36, a mother of three who worked for seven years at Middle of the World Flowers. "Our supervisor said we paid higher tariffs."

The closing, Dole executives said, was based on a number of factors, including rising costs and stiff competition from other overseas growers. But those costs were clearly made more onerous by the fact that Ecuador had no trade agreement with Washington.

The United States, in pursuing a hemisphere-wide trade pact, had assumed free trade would be an easy sell when negotiators began fanning out across Latin America in the 1990s. But many in the region, disenchanted with economic policies they say failed to bring prosperity, have supported a slew of populists sharply opposed to trade deals and other economic proposals initiated in Washington.

Those critics include President Evo Morales in Bolivia, who took office in January promising to exert state control over the economy, and Rafael Correa, an Ecuadoran presidential contender who has promised, if elected next month, to rule out a trade agreement with the United States.

Candidates are "running on it, they're talking about it, they're making it the center of their campaign," said Larry Birns, director of the Council on Hemispheric Affairs, a Washington policy group critical of U.S. trade initiatives. "Free trade has become the point of division between the liberal left and middle-class conservatives, and every election that we've seen so far has been fought along these lines."

The shuttering of Dole's flower business has brought home to this town of adobe houses and Spanish-tiled roofs the ramifications of the anti-trade fervor that has made it so difficult for Washington to secure deals in the region. Flower growers here, as well as other important businesses that rely on exports, say it is only a matter of time before their companies are adversely affected.

"This is the first signal, the alarm bell, that gives us an idea of what would happen in this sector and others in the country if we don't move forward to make ourselves more competitive," said Ignacio PĂ©rez, executive director of Ecuador's Association of Flower Producers and Exporters, a Quito-based group representing 185 growers.

In Latin America, the debate over free trade is often played out in the opinion pages of newspapers and in dry boardroom discussions about regulations and tariffs. But it is in places such as Malchingui that people's lives are directly affected -- and, at times, roiled -- by the arguments for and against free trade.

Earlier this year, thousands of highland Indians, angry that President Alfredo Palacio's government was on the verge of completing a free-trade agreement with Washington, blocked roads, burned tires and battled police. Protest leaders told poor farmers that the Americans wanted to seize control of the water supply and that their crops would be rendered worthless by U.S. imports.

"Obviously, people were scared, and that's why there was an uprising," said Francisco Arteta, who manages Quality Service, a flower-growing business in nearby Cayambe that exports mostly to Europe.

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