Categorized | Food and Ag, Trade

United States and Mexico Reach Tomato Deal, Averting a Trade War

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Reposted from The New York Times

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United States and Mexico Reach Tomato Deal, Averting a Trade War

Stephanie Strom | February 3, 2013 | NY Times

The United States and Mexico have reached a tentative agreement on cross-border trade in tomatoes, narrowly averting a trade war that threatened to engulf a swath of American businesses.

The agreement, reached late Saturday, raises the minimum sales price for Mexican tomatoes in the United States, aims to strengthen compliance and enforcement, and increases the types of tomatoes governed by the bilateral pact to four from one.

“The draft agreement raises reference prices substantially, in some cases more than double the current reference price for certain products, and accounts for changes that have occurred in the tomato market since the signing of the original agreement,” Francisco J. Sánchez, the United States under secretary of commerce for international trade, said in a statement.

The agreement will be open for public comment until Feb. 11. The Commerce Department estimated it would take effect March 4.

Estimates are that nearly half of tomatoes eaten in the United States come from Mexico. Last fall Florida tomato growers asked the Commerce Department to end a 16-year-old agreement that had suspended an antidumping investigation that began in the mid-1990s. The agreement had been amended several times over the years, but Florida growers contended it set the minimum price of Mexican tomatoes so low that the Florida growers could not compete.

The Florida growers said the new agreement addressed their three main concerns: pricing of Mexican tomatoes, the number of growers covered and enforcement.

“We believe that the Department of Commerce and Mexico have struck a deal that meets those three tests, and we’re hopeful and optimistic that we’ll be able to compete under fair trade conditions,” Edward Beckman, president of Certified Greenhouse Farmers, a trade association, said in a statement. “Much work remains to have the agreement fully and faithfully implemented, and continuous monitoring and enforcement will be critical.”

Martin Ley, a Mexican tomato producer who was on the negotiating team, said the agreement required significant concessions from the growers he represents.

“Even though no dumping or injury to the U.S. industry was demonstrated by our competitors, over the last year our growers worked with our government to overhaul the whole Mexican industry, broaden the coverage and develop tough enforcement schemes,” Mr. Ley said.

He said the agreement will be discussed by more than 600 Mexican growers this week. “While concessions on price will impose hardships on our industry, we are hopeful that over the long run we will be able to continue to supply the United States with what are acknowledged to be the best tomatoes in the market,” Mr. Ley said.

The new agreement covers all fresh and chilled tomatoes, excluding those intended for use in processing like canning and dehydrating, and in juices, sauces and purées.

It raises the basic floor price for winter tomatoes to 31 cents a pound from 21.69 cents — higher than the price the Mexicans were proposing in October — and establishes even higher prices for specialty tomatoes and tomatoes grown in controlled environments. The Mexicans have invested billions in greenhouses to grow tomatoes, while Florida tomatoes are largely picked green and treated with a gas to change their color.

The Mexican and United States governments will both carry out mechanisms to increase enforcement of the new agreement.

The dispute unfolded in the heated politics surrounding the presidential election, with Mexican growers charging that the Commerce Department was courting voters in the important swing state of Florida. Instead, the timing of the negotiations ensured that the government could win those votes and bring the controversy to a conclusion satisfactory to the Mexicans after the election was over.

The Mexicans enlisted roughly 370 American businesses, including Wal-Mart Stores and meat and vegetable producers, to argue their cause. Those businesses feared a bitter trade war like the one the Mexicans waged over trucking, which imposed stiff tariffs on American goods headed south.

If the old agreement had expired, it would effectively have led to the resumption of the antidumping investigation, and so Mexico fought hard for a new agreement, offering to substantially raise the minimum price and increase the number of Mexican growers covered by it.

 

4 Responses to “United States and Mexico Reach Tomato Deal, Averting a Trade War”

  1. maggie says:

    Tomato war! Head for the tomato bomb shelter! The rivers run red with ketchup!

  2. Tom T. says:

    When “constant monitoring” and enforcement are required for this trade, why should U.S. taxpayers pay for these expenses? It seems to me that any enforcement costs should be paid on the goods coming across the border as those are the ones creating the monitoring and enforcement costs.

    Tom T.

    • Robert says:

      Tom – kinda like a border tax – like everyone else, including Mexico, applies to US goods…… Whatta concept. Play by the same rules….

  3. Deborah says:

    I try not to buy ANYTHING from Mexico..they get enough of our money from the illegals here working tax free and sending US currency back to their families to be put back into THEIR economy!!! I will continue to grow my own thank you very much!

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