Closing the loopholes in tomato deal: Can it be done?

02/06/2013 04:35:00 AM
Tom Karst

National Editor Tom KarstChecking The Packer news site and the web this morning, I found a whopping 23 comments so far on the story about the draft suspension agreement. between Mexican tomato growers and the Commerce Department.

Some of the comments relate to possible loopholes in the agreement; selling to a Canadian receiver who then reexports to the U.S., sham accounting, and so on. However, reading the draft text, I believe most of these bogus work-arounds have been thought of. Here is a list of activities that will be considered violations of the agreement:

1. sales that are at net prices(after rebates, backbilling, discounts for quality and other claims) that are below the reference price

2. any act or practice which would have the effect of hiding the real price of the fresh tomatoes being sold (e.g., a bundling arrangement, discounts/free goods, financing package, swap or other exchange).

3. Sales that are not in accordance with the terms and conditions applied by the Department when calculating prices for transactions involving adjustments due to changes in condition after shipment as detailed in Appendix F of this agreement.

4. Selling signatory tomatoes to Canada in a manner that is not consistent with the requirements of Appendix E of this agreement.

5. Selling signatory tomatoes for processing in the U.S. in a manner that is not consistent with the requirements of Appendix F of this agreement.

6. Any other act or practice that the Department, U.S. Customs and Border Protection, or PACA finds in violation of this agreement.

 

Whether this amount of oversight, attention and scrutiny can in fact be consistently applied to the many millions of cartons of Mexican tomatoes sold into  the U.S. will be the issue. And at what cost to the trade and to consumers?

As Jacob from California said in a reader comment on the main story:

How about we all( Mexican And US growers) stop growing so many tomatoes. Let a market be a real market and we wont have to worry minimums.

In a related comment, perhaps, one reader emailed a recommendation of the recent Forbes article on anti dumping law. From that story:

Not only will consumers pay more for foreign and domestically grown tomatoes at the grocery store and for salads and hamburgers at restaurants, but the new price-floor terms provide a strong indication that the specter of uncertainty associated with antidumping administration provides the necessary leverage to induce foreign producers into pricing schemes indistinguishable from collusion and price-fixing.

It is perhaps too early to make a judgment on the draft agreement. Certainly we all believe a suspension agreement is better than a "trade war."  But that is just faint praise at this point.



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