As an economist, I am skeptical of the phrase “a rising tide lifts all boats.” Attributed to U.S. President John F. Kennedy, the expression is associated with the idea that comparative-advantage production and subsequent trade would theoretically increase incomes for all participating entities. That’s a complicated way to say that if one country can produce and export inexpensive, quality products, consumers and producers both win.
This of course is not always the case, particularly for poor countries whose workers do not have access to the global economy.
But the aphorism has found at least one instance of proof in the real world, in the trade relationship between the U.S. and Ecuador.
Over the past 20 years, trade and investment between our two countries has grown in leaps and bounds. Today, more than $16 billion in bilateral commerce takes place each year. As part of this exchange, Ecuador supplies millions of American households with popular products such as bananas, chocolate, pineapples, tuna, and flowers.
The benefits of this trade are two-way.
For instance, one out of every four roses bought in the U.S. comes from Ecuador (many varieties purchased from U.S. rose breeders).
The rose industry in Ecuador provides good paying jobs for thousands of poor rural women-many of whom are heads of households. Those jobs are draining the drug trade of recruits, which in turn helps keeps drugs off the streets of the U.S.
At the same time, tens of thousands of workers in the U.S. — from importers to cargo and transport to florists to supermarkets — depend on those flowers for their jobs.
And of course, roses add beauty to our lives.
In Ecuador, we call this phenomenon “The Flower Effect.”
Shelley Rosen lives in Chicago. She is living proof of the “flower effect.” She has a start-up business called Luxe Bloom that provides Ecuador-grown flowers to the U.S. commercial hospitality sector. Along with these great products, she has brought innovation to the sector — her roses do not require water or refrigeration — and her business is booming as a result. In her third year, she is expecting $25 million in revenues.
Maria Pacheco works on a rose farm in Cayambe, Ecuador. She too is an example of the flower effect. She earns nearly twice the minimum wage, and has a pension and health benefits. By employing women such as Maria, the rose industry has fostered a social revolution in Ecuador in which women have more control over their lives, higher standards of living, and better ability to provide educational and socio-economic opportunities to their children. Her primary alternatives are poverty or the regional drug trade, which sees Ecuador — although not a drug-producing nation — as a convenient corridor to the U.S.
The flower effect is made possible by a joint commitment by the U.S. and Ecuadorian governments to the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The 20-year-old program was strategically designed to lower barriers to trade in certain sectors that are proven to successfully combat the drug trade, allowing Ecuador to exploit its comparative advantages in the growing of roses (not to mention the production of chocolate, artichokes, quinoa, and other popular products).
Now a major exporter in these industries, Ecuador has seen its economic growth and personal incomes increase dramatically. The program also benefits consumers in the U.S., who now have access to affordable high-quality products from Ecuador. American seed, fertilizer and farm equipment providers, distribution and transportation companies, and retailers all benefit from the ATPDEA production chain. Roughly 75 cents of every dollar spent on Ecuadorean roses stays in the U.S. economy, and tens of thousands of U.S. jobs have been created in the floral sector alone.
The program also benefits foreigners who export goods and services to Ecuador, for a stronger Ecuadorian economy can purchase more of those goods and services.
In a perfect world, such a trade relationship would be a model “win-win” situation. Jobs. Empowerment of women. Enhanced security. But we do not live in a perfect world. The APTDEA is now being threatened by special interests with private grievances. The whole benefit chain is at risk because an international oil company was found guilty of poisoning the Amazon rainforest. So the aggrieved company adds insult to injury by spending millions to derail renewal of the ATPDEA, which is due to expire on July 31.
We must not let special interests sink the lifeboats of economic recovery amid a rising tide of opportunity. We must encourage the U.S. government to adhere to the vision and strategic partnership between our two countries that has been so successful over the past twenty years. We must keep trade, and the flower effect, going.