US and Mexico set­tle tomato trade dis­pute

Agree­ment staves off tar­iffs, higher prices and pos­si­ble short­age

The Morning Call - - BUSINESS CYCLE - By Tay­lor Telford

WASH­ING­TON — The United States and Mexico have set­tled a bit­ter trade dis­pute over toma­toes, with the United States shelv­ing an anti-dump­ing in­ves­ti­ga­tion against Mex­i­can grow­ers and with­draw­ing from tar­iffs that could have led to short­ages and sig­nif­i­cantly higher prices.

Un­der the buzzer-beater agree­ment, reached just be­fore a Wed­nes­day dead­line, 92% of im­ported Mex­i­can toma­toes will be sub­ject to in­spec­tion be­fore cross­ing the bor­der, ac­cord­ing to a state­ment from the Con­fed­er­a­tion of Agri­cul­tural As­so­ci­a­tions of the State of Si­naloa. It also dic­tates that Mex­i­can grow­ers raise the ref­er­ence price of spe­cialty toma­toes, and charge 40% more for or­ganic toma­toes than con­ven­tional ones.

“In the fi­nal mo­ments of Au­gust 20, Mex­i­can tomato pro­duc­ers reached an agree­ment with the U.S. Depart­ment of Com­merce, which will al­low the anti-dump­ing in­ves­ti­ga­tion to be sus­pended,” Mex­i­can Econ­omy Min­is­ter Gra­ciela Mar­quez tweeted Wed­nes­day. “This re­sult is good news be­cause it will al­low the mar­ket to be kept open for our tomato ex­ports to the United States.”

In Fe­bru­ary, the U.S. Com­merce Depart­ment an­nounced it would be pulling out of the Tomato Sus­pen­sion Agree­ment — which has set the pa­ram­e­ters of the two na­tions’ tomato trade since 1996 — in part due to pres­sure from Florida law­mak­ers and the Florida Tomato Ex­change, a U.S. trade group, which al­leged Mex­i­can grow­ers were ex­ploit­ing the agree­ment to dump cheap toma­toes into the U.S. and un­der­mine Amer­i­can farms.

The ter­mi­na­tion of that pact called for a 17.5% tar­iff on im­ported Mex­i­can toma­toes, which make up more than half of the U.S. tomato mar­ket. An April study from economists at Ari­zona State Univer­sity pre­dicted that the col­lapse of the agree­ment would leave Amer­i­cans to pay 40% to 85% more for one of their fa­vorite fruits by win­ter.

U.S. grow­ers con­tend that as a re­sult of Mex­i­can prac­tices, U.S. tomato pro­duc­tion de­clined by 34%, from 4.4 bil­lion pounds to 2.9 bil­lion pounds, be­tween 2002 and 2017. Mex­i­can tomato im­ports to the United States sky­rock­eted 125%, from 1.6 bil­lion pounds to 3.6 bil­lion pounds, dur­ing the same pe­riod.

“Tomato grow­ers shouldn’t have to lose their liveli­hoods be­cause of a bad deal im­posed upon them by their own gov­ern­ment, and that’s ex­actly what was hap­pen­ing un­der the pre­vi­ous sus­pen­sion agree­ment,” Sen. Marco Ru­bio, R-Fla., who led the charge to re­open the anti-dump­ing probe, said this month. “The fact re­mains that the Mex­i­cans have avoided se­ri­ous ne­go­ti­a­tions for well over a year pre­fer­ring to use scare tac­tics and in­flam­ma­tory rhetoric.”

Mex­i­can grow­ers dis­puted ac­cu­sa­tions of dump­ing and un­fair prac­tices, ar­gu­ing that Florida’s de­clin­ing tomato in­dus­try was a re­sult of its dif­fi­culty in pro­duc­ing qual­ity, af­ford­able prod­ucts. Ne­go­ti­a­tions have been on­go­ing for months, but the U.S. in­sis­tence that all im­ported toma­toes be sub­ject to qual­ity in­spec­tion be­came a stick­ing point.

“In­spec­tions of Mex­i­can toma­toes would ac­com­plish noth­ing be­cause USDA records show that 99% of toma­toes meet stan­dards upon ar­rival at cus­tomers’ ware­houses. The Florida Tomato Ex­change has told Com­merce that the in­creased in­spec­tions would not im­pact the flow of trade, which is an as­ser­tion that is sim­ply not true,” Lance Jung­meyer, pres­i­dent of the Fresh Pro­duce As­so­ci­a­tion of the Amer­i­cas in No­gales, Ari­zona, said ear­lier this month. “The in­spec­tions would add more than $270 mil­lion in un­nec­es­sary costs.”

A 92% in­spec­tion rate is a com­pro­mise, but a coali­tion of Mex­i­can agri­cul­tural as­so­ci­a­tions crit­i­cized the terms of the agree­ment Wed­nes­day, Reuters re­ported. The new tomato agree­ment is slated to be re­viewed again in 2024.

Mexico ex­ports about $2 bil­lion worth of toma­toes to the U.S. each year, which ac­counts for more than half of the U.S. tomato mar­ket, but the trade ben­e­fits Amer­i­cans be­yond meal­time. A Novem­ber study from the Univer­sity of Ari­zona es­ti­mated that Mex­i­can toma­toes sup­port about 33,000 jobs and con­trib­ute nearly $3 bil­lion to the United States’ GDP.

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