(UPDATED COVERAGE, March 15) If a seminar by the U.S. Commerce Department on new rules overseeing the imports of Mexican tomatoes is an indication, importers are concerned about loopholes and exceptions to the new price structure.
About 230 people participated in the March 14 Web seminar, which was designed to educate the industry on the suspension agreement, which became effective March 4.
The U,S, Department of Agriculture’s Brian Wright and the Commerce Department’s Judy Rudman gave presentations. Rudman referred many of the questioners to the text of the agreement and other documents at the Commerce Department website. The presentations and an audio recording of the web seminar will be sent to participants and will eventually will be posted online.
After 30 minutes of presentations, Rudman took nearly an hour of questions from the Web audience. Many addressed how inspections and quality issues would affect compliance with the agreement. Other questions related to processing exceptions, sales to Canada, differences in summer and winter prices, the coverage of the agreement in Mexico and the correlation between “controlled environment” and greenhouse tomatoes.
One question was about what the Commerce Department would do if tomatoes from Mexican growers who did not sign the agreement come into the U.S. Rudman said the agreement has to cover 85% of all U.S. imports of Mexican tomatoes. She said that Commerce officials monitor imports to make sure that the agreement covers at least 85% of the volume. However, U.S. law allows tomatoes from growers who haven’t signed the agreement. Those growers would not have to comply with minimum price requirements, she said, as long as those tomatoes don’t account for more than 15% of total Mexican tomato imports.
“There are references in the new agreement to actions by the Mexican government that will significantly increase the signatory coverage and ensure greater coverage of the agreement for Mexican imports,” she said.
Lance Jungmeyer, president of the Fresh Produce Association of the Americas, later clarified information about the 15%-85% rule.
" ... (The) comment about 85% coverage was related to existing U.S. trade standards regarding suspension agreements," Jungmeyer said. "The 100% coverage of Mexican tomato exports is enabled by the Mexican federal government. U.S. selling agents and their growers in Mexico need to make sure they are aware of these new provisions.
Rudman and Wright suggested that selling agents keep paperwork for two years to prove compliance.
In his presentation, Wright pointed out what constitutes violations of the suspension agreement and possible violation of the Perishable Agricultural Commodities Act.
“PACA is not a party to the suspension agreement but the actions of a PACA licensee or a firm operating subject to a license which violates the suspension agreement may constitute an unfair trade practice, which would violate the PACA,” he said.
An example of a violation of the agreement and PACA, he said, would be if a selling agent issues a false invoice to hide the actual sales price of tomatoes,” he said.
In order for PACA to start an investigation, Wright said the USDA must receive written notification. Upon receiving an allegation, Wright said PACA will examine the allegation and determine whether to investigate, issue a warning letter or perhaps issue an administrative complaint. Any allegation or notification should include as much detail and documentation as possible, he said.
“The identity of the person providing written notification will not be released by PACA by statutory prohibition, he said. Fines and suspension to a PACA licensee if they don’t cooperate with an investigation, he said.
Flagrant, repeated violations such as false accounting and alternations of inspection certificates can result in suspension of PACA licenses, personal sanctions or civil penalties, he said.
One participant said the 90-minute event was helpful.
“A lot of the information we knew already but there was some new information that came out,” said Charlie Everette, quality and claims manager for Apache Produce, Nogales, Ariz.
In particular, Everette said the 15% rule was something he had not been aware of.
“Someone asked what happens if someone is not a part of the agreement and (Rudman said) they can just bring their tomatoes in,” he said. “In other words, 15% can bring them in and not have any application to the agreement.”
Everette also said that he learned that various paperwork forms dealing with processed tomatoes and instructions on how to apply adjustments based on inspection results are also on the Commerce website.
Because the web seminar did cover so much ground, Everette said it will be valuable to have the copies of the presentations.
NOTE ON UPDATE: The story contains a clarification on exemptions relating to the 85% rule.