The Commerce Department and Mexican tomato growers initialed a new agreement that, beginning on Sept. 19, will control U.S. imports of roughly $2 billion a year worth of fresh tomatoes from Mexico, said officials from both nations on Wednesday. The United States terminated the preceding “suspension agreement” following complaints by Florida growers that Mexican tomatoes were being sold at less than fair value.
The new agreement averts the possibility of U.S. duties as high as 25 percent on Mexican tomatoes. “This draft agreement meets the needs of both sides and avoids the need for anti-dumping duties,” said Commerce Secretary Wilbur Ross.
“Mexican producers showed willingness and flexibility to reach a new agreement that would benefit all the parties involved,” said Mexico’s Ministry of Economy, noting the “serious risk for the export sector” if sales had been cut off. Although the Mexican government provided advice and other assistance to the growers, it did not have a direct role in the negotiations.
Since May, the United States has collected cash deposits or bonds from tomato importers based on a 1996 preliminary ruling that called for duties of 17.5 percent. The deposits will be refunded once the new agreement takes effect, said the ministry. Agreements have regulated tomato imports for two decades; Mexico says the result has been a large variety of good-quality tomatoes available to U.S. consumers at competitive prices.
The tomato pact is called a suspension agreement because it halts a Commerce Department anti-dumping investigation of the imports. Last November, the Florida Tomato Exchange asked for the resumption of the investigation, and on May 7, the United States withdrew from the 2013 suspension agreement. Mexico’s share of the U.S. tomato market has grown by more than 20 percentage points since 2013.
Under the new agreement, reference prices will be set for various types of tomatoes and the United States can audit 80 or more tomato producers during each three-month period of the year. The Commerce Department said the new pact “includes a brand-new inspection mechanism to prevent the importation of low-quality, poor-condition tomatoes from Mexico, which can have price suppressive effects.”
Agricultural groups in Mexico said the agreement included the “controversial proposal” for border inspections for quality purposes of 92 percent of tomatoes headed to the United States, reported Reuters. The Fresh Produce Association of the Americas, based in Arizona and speaking for importers, has argued that inspections would be costly, amount to a non-tariff trade barrier, and invite inspections of U.S. ag exports.
Florida produce growers unsuccessfully sought to have new protections against seasonal surges of Mexican fresh produce included in the United States-Mexico-Canada Agreement. Growers in the U.S. West said such restrictions could be used against them when they ship produce into Mexico. The Trump administration is pressing for congressional approval of the USMCA in the fall.
“We look forward to more progress on the trade front and are counting the days until the USMCA becomes law,” said Zippy Duvall, president of the American Farm Bureau Federation. The farm group said the tomato deal “shows the United States can work out trade disputes without resorting to tariffs.”
By a small margin, Mexico leads Canada as the top food and agriculture trading partner of the United States.