The Mexican tomato industry and the U.S. Department of Commerce entered into a draft agreement on August 21 that would end a bitter trade dispute and withdraw tariffs that might have caused tomato shortages and higher prices domestically.
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The new agreement would suspend the ongoing antidumping investigation by the United States into fresh tomatoes from Mexico and avoid antidumping duties. It also would protect the domestic tomato industry from low-priced imports.
“For many years, there have been disputes over the roughly $2 billion worth of tomatoes that are imported from Mexico annually,” says U.S. Secretary of Commerce Wilbur Ross. ‘These disputes led the department to terminate an earlier suspension agreement and continue an investigation that could have led to duties of 25 percent for most Mexican tomato producers.’
The commerce department and the Mexican growers could sign a final agreement on September 19. In that case, the commerce department would suspend the ongoing anti-dumping investigation without issuing a final determination. If a final agreement isn’t reached, further anti-dumping investigations could ensue and U.S. duties on Mexican tomatoes will continue at 17.5 percent and could rise to 25.5 percent.
The draft agreement sets reference prices for rounds and romas at $0.31/lb., stem-on tomatoes at $0.46/lb., tomatoes on the vine at $0.50/lb., specialty loose tomatoes at $0.49/lb., and specialty packed tomatoes at $0.59/lb., with organic tomatoes priced 40 percent higher than non-organics.
Importers also would be entitled to a reimbursement of cash deposits made from when the anti-dumping investigation was reactivated on May 7, 2019.
The draft agreement stems from a November 14, 2018 request from the Florida Tomato Exchange to the commerce depart to terminate the 2013 suspension agreement on fresh tomatoes. The agreement was terminated May 7, 2019, but the anti-dumping investigation continued.
On the whole, the draft agreement was received positively by the U.S. produce industry.
“The agreement establishes unprecedented measures and enforcement provisions that will help protect American tomato farmers from injurious dumped Mexican tomatoes,” says the Florida Tomato Exchange.
U.S. Secretary of Agriculture Sonny Perdue says U.S. tomato producers, including those in Arizona, California, the Carolinas, Florida, and Georgia, will benefit from “the elimination of the unfair trade practices we have seen from these Mexican tomato imports.”
The Produce Marketing Association says the agreement will help bring certainty to the market.
And the United Fresh Produce Association says the agreement will benefit the entire distribution chain, especially growers and consumers.
However, the Fresh Produce Association of the Americas, a nonprofit trade association representing more than 100 fresh produce companies headquartered in Nogales, Arizona, says it worries about inspection provisions in the new agreement.
One provision would require inspections on 66 percent of tomatoes, excluding tomatoes on the vine, according to the commerce department.
“Because of the sheer volume of tomatoes shipped north from Mexico to the U.S., we can expect the inspections to create substantial delays that compromise the quality affordability and availability of tomatoes to American consumers and will create bottlenecks for other goods crossing the border,” says Lance Jungmeyer, president of the Fresh Produce Association.
He called the inspection provision “essentially a non-tariff trade barrier.”
The association estimated it will cost $220 million to construct the warehouse space needed for the enhanced inspections, as well as related costs of close to $50 million annually.