In recent weeks, media outlets have been overrun with news of the dispute between Mexico and the existing antidumping suspension agreement between the U.S. Department of Commerce and Mexican tomato exporters.
The majority of this coverage has not been factual, and it’s time to set the record straight.
In 1996, American tomato growers brought a dumping case against the Mexican industry.
Our government found preliminary dumping margins ranging up to 177% and material injury.
Mexican growers then entered into an agreement not to export tomatoes for less than the negotiated reference price. Enforcement has failed. Domestic producers have worked with the Department of Commerce for the past 16 years to identify and solve the problems, yet the agreement has increasingly failed to meet the minimum statutory requirements for fair terms of competition.
In submissions made over the past four months, domestic tomato producers who account for more than 90% of domestic production have sought to terminate the suspended investigation and suspension agreement in an effort to have fair trade conditions restored.
Why? Because a lot has changed in the past 16 years: Our economy and the Mexican economy have changed drastically. Inflation in Mexico has risen by almost 250%. Growing methods have evolved.
Greenhouse production, in particular, evolved from a boutique product to one now representing roughly 40% of Mexico’s exports.
Yet the reference price — intended to eliminate at least 85% of dumping margins — neither reflects the changing cost structure in Mexico’s field production, the difference in types of tomatoes or higher costs of production from different production methods, such as greenhouse growing.
In the past 16 years, imports from Mexico have grown rapidly, while domestic production continues to shrink. Domestic producers are losing vast sums and a number of producers are closing shop.
As a result, tens of thousands of U.S. jobs are at risk.
The Mexican government put out a study of greenhouse production costs in 2007 showing that their producers who export had costs as much as 400% higher than the summer reference price in place — meaning the reference price in place is as little as 21% of the cost of production of greenhouse tomatoes in Mexico.
This situation is unsustainable and impossible to compete against.
The future of domestic tomatoes
The current agreement is outdated, doesn’t meet the requirements of U.S. law, doesn’t provide the relief that U.S. producers are entitled to under the law and has proven unenforceable.
When domestic producers filed the petition on June 22, they had every reason to expect that Commerce would agree to withdrawal, and do so quickly, as has been the precedent.
This is the first time where foreign producers have fought to keep a U.S. trade remedy in place. That tells the real story.
The current situation favors Mexican growers and protects the windfall profits they’ve been reaping.
Mexican growers are pursuing scare and bullying tactics. They’ve threatened retaliation against customers and producers of products not involved in the case.
These threats, if carried out, are simply illegal.
Mexican special interests have also suggested that domestic producers are trying to eliminate their product from the marketplace to eliminate competition. This accusation is totally false.
Terminating the suspension agreement and suspended investigation simply eliminates any existing government oversight of imports. No restrictions on trade will result.
Domestic growers are entitled to free and fair trade — and that’s all they want.
It’s time to end the charade, assess the facts and level the playing field. That is the only chance we have to salvage our domestic tomato market and save the tens of thousands of jobs nationwide that are currently at risk.
Reggie Brown is the executive vice president of the Maitland-based Florida Tomato Exchange.