U.S. set to drop Mexican tomato suspension agreement

The Department of Commerce will follow through on its plan to withdraw from an agreement with Mexican tomato growers, triggering a 17.56% duty on tomatoes from Mexico, according to a Mexican official.

While negotiations continue on a renewed deal, Reuters quoted Mexican Deputy Economy Minister Luz Maria de la Mora stating the Commerce Department will withdraw from the agreement.

Martin Ley, president of importer Fresh Evolution LLC, Nogales, Ariz., said growers still hope to resolve remaining issues.

“The Mexican growers have been negotiating in good faith with the U.S. Commerce Department for more than a year in an effort to strengthen the Tomato Suspension Agreement,” Ley said in a May 7 e-mail.

“We await the Department’s announcement today concerning the future of the agreement,” he wrote. “While we are extremely disappointed with the Commerce Department’s decision to terminate the agreement, we will continue to negotiate in an effort to resolve all remaining issues.”

The tomato suspension agreement has been in place since 1996, and was renegotiated in 2002, in 2008 and again in 2013.

The Commerce Department announced plans to scrap the suspension agreement three months ago.

The department has not released an official statement on its expected actions through mid-morning May 7, said Jason Klinowski, agriculture and food law attorney at Wallace Jordan Ratliff & Brandt LLC, Birmingham, Ala.

“We’re waiting for the official order to come down,” Klinowski said May 7. Once the order is issued, customs will start assessing the duty, he said.

Klinowski said the Department of Commerce gave Mexican tomato growers a new proposal for a suspension agreement over the weekend.

The Mexican negotiating team is talking to their attorneys and consultants but has not yet released any public comment about the latest offer from Commerce.

Even if a deal is reached soon, the anti-dumping duty would likely be in place 30 or 45 days while the Commerce Department accepts public comments on the new suspension agreement.

If no deal is reached, there is a possibility that the current anti-dumping duty could be adjusted after a fact-finding process. That review could occur by this fall, he said, and could either increase or decrease the anti-dumping duty on a retroactive basis from May 7.

The importer of record would be on the hook to make up any shortfall in duties collected or could receive a refund if the anti-dumping duty is lowered.

Klinowski said a big point of discussion in the industry now is who can be the importer of record, and specifically if Mexican growers could serve as the importer of record.

“There’s a lot of lot of arguments in favor of why the Mexican grower should be the importer of record, but what comes with that is (the question) does that  grower has the ability to attain a continuous entry bond,” he said.

That involves a review of financial records and includes the question whether insurers would issue the bond and how much collateral might be required. Some growers could meet the requirements, but not all, he said.

“Some growers are really kind of dependent on U.S. customers for grower advances and don’t have the ability to do that, they have to seek out strategic partnerships,” he said. 
 

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