US and Mexico settle tomato trade dispute
Agreement staves off tariffs, higher prices and possible shortage
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.