With the clock ticking on a 270-day countdown to the final decision about the tomato trade agreement with Mexico, supporters of the agreement reiterated their stand as the Commerce Department officially posted its intent to end the agreement.
In a Federal Register notice on Oct. 2, the Commerce Department laid out the timetable for the process. But U.S. produce and business leaders said during a media teleconference the same day that the department’s intended action is based on erroneous information from the Florida tomato industry and the U.S. Department of Agriculture.
Bill Reinsch, president of the National Foreign Trade Council, Washington D.C., said the 80 growers who requested the termination do not represent 85% of tomato producers in the U.S., which is the minimum percentage necessary as required by federal statute.
“It is important for the department to follow the letter of the law,” Reinsch said.
Mexican growers contend the 80 U.S. growers who want the agreement terminated only represent 42% of U.S. tomato growers, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, Nogales, Ariz. He said part of the discrepancy is because there are thousands and thousands of growers who are not reflected in USDA statistics, which focus on larger operations.
In the Federal Register notice, the Commerce Department officials noted the dispute about the grower percentage requirement, saying that “the USDA Yearbook is an objective and reliable source.” The notice states the department will accept comments on its intent to terminate for 15 days. Additional comment periods are built into the 270-day process.
Reinsch said the situation “has all the earmarks of a process that is trying to push a decision” before the presidential election, citing political motivation because of Florida’s so-called swing-state status.
Agreeing that there was political motivation, one supporter of the agreement said that goal has already been met.
“Florida has gotten part of what they want, politically,” said John McClung, president of the Texas International Produce Association, adding that even though the 270-day process will play out after the Nov. 6 election, voters in Florida have already seen support from the Obama administration.
McClung said the remaining issue for Florida growers is a higher base price on Mexican tomatoes. Jungmeyer said the agreement currently has the price set at roughly 21 cents per pound in winter and about 17 cents per pound in summer. He said about half of the fresh tomatoes in the U.S. during winter are from Mexico, with the other half coming from Florida.
McClung said he believes the second phase of the Florida growers’ strategy is to immediately request a dumping investigation once the suspension agreement is dropped.
“Those can go on for years and years and cost a lot,” McClung said, adding that all the while the Florida growers would have the advantage of no competition from Mexican tomato growers.
That would most likely mean higher prices for U.S. consumers at the grocery store and in restaurants, he said.
The potential for retaliatory tariffs on U.S. produce is another concern.
When the U.S. failed to allow Mexican trucks to cross the border as required by the North American Free Trade Agreement, Mexico slapped tariffs of 10% to 45% on several U.S. commodities. McClung said the apple industry was hit particularly hard because Mexico is the largest export market for U.S. growers.
Jungmeyer said his recent conversations with Mexican growers and officials proved to him that tariffs would undoubtedly be imposed.
“Many officials feel this is an affront. It’s a matter of national pride and they feel justified in taking action,” Jungmeyer said.
In addition to pricing and tariff issues, the supporters of the 16-year-old tomato trade agreement said its termination would have a ripple effect on the U.S. economy. Victims of those effects included trucking companies and the service providers they use while transporting the loads.
“There would be less collected in fuel taxes and less money spent at restaurants and hotels along their routes,” Jungmeyer said.
Jungmeyer said the port of entry at Nogales sees about 1,200 trucks daily cross into the U.S. with fresh produce during winter months. About a third of those are full of tomatoes.
McClung said American jobs are also at stake.
“The importers who are opposing this termination are not doing so to protect Mexican jobs, they are doing it to save jobs in the U.S.,” McClung said, explaining that the importers would reduce staff if they did not have Mexican tomatoes to pack and ship.
Ultimately, the supporters of the current trade agreement said the push by the Florida growers to terminate the agreement now is unnecessary because it is scheduled to end in December anyway. At that time, the terms of the agreement would have been renegotiated.
Agreeing with Reinsch of the National Foreign Trade Council, McClung said the termination effort was launched to create an “artificial urgency because of growers in a swing state.”