See related article: Mexico tomato interests look to keep agreement.
(UPDATED COVERAGE, Sept. 28) The tomato suspension agreement between Mexican tomato growers and the U.S. appears to be doomed, potentially opening up new trade frictions between the two countries.
Lance Jungmeyer, president of the Fresh Produce Association of the Americas, Nogales, Ariz., said the importing community in Nogales was shocked about the decision, which the group said was possibly motivated by political interests in favor of the Obama administration.
The Department of Commerce announced a preliminary decision September 27 to terminate the suspended antidumping investigation, effectively killing the 16-year-old suspension agreement.
In August, the Department of Commerce said it would take comments on a request by Florida tomato interests to terminate the suspension agreement, which has governed the price of imported Mexican tomatoes since 1996. The Department of Commerce must announce a final decision by late April but could move sooner.
“I think the fact that groups like Wal-Mart, (the Food Marketing Institute, the National Restaurant Association) and U.S. Chamber of Commerce have weighed in certainly puts the Department of Commerce on notice that everyone is watching,” Jungmeyer said.
Jungmeyer said there are 350,000 jobs in Mexico that rely on the tomato export industry, and Mexico takes its number one export to the U.S. very seriously.
The Department of Commerce is seeking comments on the preliminary results until 15 days after its publication in the Federal Register, which was expected to be Sept. 28.
Florida tomato industry leaders were pleased with the news.
“Our preference would have been for a final ruling as opposed to a preliminary ruling, but we appreciate the challenge the Commerce had in sorting through the various filings that have come forward,” said Reggie Brown, vice president of the Florida Tomato Exchange, Maitland, Fla.
Brown said the withdrawal of the suspension would put in place a free market where there would be no restrictions on Mexican imports — but the Florida tomato industry will “exercise trade laws” if it perceives dumping is occurring, as it did when seeking the original 1996 ruling.
Jungmeyer said Florida leaders have promised to pursue anti-dumping actions, but there are problems with trying to prove dumping when Mexican producers have been complying with the price suspension agreement with the U.S. for years.
Brown refuted allegations that the Commerce Department acted for political reasons. He said growers in Florida may have lost $100 million to $150 million last season, with three multi-generational companies closing their doors.
“We cannot sustain an agreement that is tilted very heavily in favor of the import industry,” he said.
What’s more, Brown called the idea that Mexico grows different type of tomatoes than the U.S. a “crock.” “There’s a domestic greenhouse industry that grows exactly the same thing the Mexicans grow, and there’s a field industry that grows exactly the same thing the Mexicans grow, so there’s no difference in the product,” he said.
During the 16 years of the suspension, he said the U.S. tomato industry shrank as Mexico’s almost doubled.
“Now tell me the suspension agreement is something the domestic industry should want to sustain,” he said. “That’s why 90% of the domestic industry spoke up and said we can’t do this anymore.”
The Department of Commerce said 80 U.S. tomato growers representing 90% of U.S. production had no interest in continuing with the suspension agreement, satisfying the 85% threshold for consulting “substantially all” domestic producers.
Jungmeyer said growers and exporters believe the Department of Commerce should review those numbers.
“We believe (claims of 90% support) is not right and they are basing that data on some information from USDA ERS that only includes data from 20 states,” he said.