Move toward tearing up 16-year US-Mexico tomato trade pact gets bad reviews
The US Commerce Department’s September 27 preliminary decision to end a trade pact governing the price of tomatoes exported by Mexico to the US has drawn criticism up and down the supply chain, from tomato importers and marketers in Arizona and Texas to such purveyors as Wal-Mart and industry groups including the Food Marketing Institute and the National Restaurant Association. They fear a loss of stability in the market, higher prices for consumers, damage to domestic industry, and the start of a trade war between NAFTA partners. (Comment letters are available on IA-Access, Case No. A-201-820.)
A 16-year-old trade pact sets a minimum price on tomatoes from Mexico, source for $1.8 billion worth or 84.56% (based FOB Value US$) of US tomato imports in 2011 (see below).
Technically, the trade pact is a “suspension agreement” — back in 1996, the Commerce Department suspended antidumping proceedings when the US and Mexico reached a deal on the price. In June of this year, US domestic producers led by the Florida Tomato Exchange (and, they say, though the claim is disputed, representing more than 90% of US production) petitioned the government to lift the suspension, clearing the way for a new antidumping investigation and, potentially, import duties on Mexican tomatoes.
The price of tomatoes is under pressure this year thanks to perfect growing conditions and a bumper crop in Mexico, the US and Canada. Critics say that the Florida growers will be hard put to demonstrate injury due to the suspension agreement.
Just yesterday, Bloomberg reports, Mexican growers countered with a proposal to boost the floor price. No comment yet from the Commerce Department.
Date posted: October 19, 2012