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U.S. and Mexico reach new agreement on tomato trade
 
By KEVIN WALKER
Michigan Correspondent

WASHINGTON, D.C. — The U.S. government and Mexican tomato growers have reached a new deal governing the tomato trade that will avert another trade dispute and even a wider trade war.
“I am pleased that we were able to come to an agreement on fresh tomato imports from Mexico, that restores stability and confidence to the U.S. tomato market and meets the requirements of U.S. law,” said Francisco Sanchez, U.S. Department of Commerce (DOC) under secretary for international trade.

“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. This solution puts in place important mechanisms to attain increased signatory coverage and robust enforcement that will allow American workers and the U.S. tomato industry to compete on a level playing field.”

On Feb. 2 USDA Secretary Tom Vilsack commented on this, saying the draft agreement meets the requirements of U.S. anti-dumping law and provides an effective remedy for domestic producers.
The tomato trade issue goes back to at least 1996, when the DOC started an anti-dumping investigation into whether fresh tomatoes from Mexico were being sold in the United States for less than fair value. At that time the U.S. government determined this was indeed happening, but that year an agreement was reached between Mexican growers and the United States to suspend the investigation.

This was called a suspension agreement because it suspended the anti-dumping investigation. Suspension agreements for the tomato trade were subsequently signed in 2002 and 2008, as well.
According to the DOC, under anti-dumping law the suspension agreement must prevent price undercutting and price suppression in the U.S. market and eliminate at least 85 percent of the dumping, thus providing the U.S. industry an opportunity to compete on a level field.

Reggie Brown, manager of the Florida Tomato Committee, sounded hopeful the new suspension agreement would improve things for domestic tomato growers. More than 90 percent of tomato growers in the United States wanted out of the previous agreement, he said.

“There’s been a steady erosion of the U.S. market over that period,” Brown stated, referring to the period 1996 to the present. “Now we’re hoping that the new agreement is a step forward. We’re optimistic that this is a better deal for our growers.”

He said that the reference price is the minimum price the product can receive when it comes in at the border. Dumping occurs when a product is sold for less than what it costs to produce it.

Although Florida and California are the largest domestic producers of tomatoes, Brown said most states have some tomato production. Mexican growers have upgraded their own facilities so they can raise tomatoes all year, and this has caused problems for tomato growers in states that didn’t used to compete with Mexico.
“They have basically destroyed the market in Michigan in the summer,” he said.

Mexican growers are not happy with the agreement. Last week the Fresh Produce Assoc. of the Americas (FPAA), which represents Mexican growers in the United States, described the prices agreed to in the latest suspension agreement as “not reasonable.”
Lance Jungmeyer, president of the group, said in a statement last week that his group urged the DOC to continue trade under the prior agreement. The agreement signed in 2008 brought “peace and stability to the U.S. market for fresh vegetables for 16 years. But this agreement goes well beyond what is needed, raises prices unacceptably and is not what distributors had in mind.”

He went on to say the latest deal goes beyond protecting the U.S. industry from injury and that it will lock a big portion of Mexican production out of the U.S. market. He also said it will be a thorn in the side of U.S.-Mexican relations for years to come.
2/13/2013