The Agreement would not permit that; it would require that the seller to the signatory seller notify the Canadian customer that any sales of the product back into the U.S. are subject to the terms of the Agreement.
Are you required to have a federal inspection for all price reductions, or just those that would go below the reference price?
That’s a good question. If the price is $12 a box and the market drops, and it is agreed the seller and the buyer agree to $10 a box instead of $12, that adjustment can be made without involving Commerce. The Agreement comes into effect when any of the tomatoes in the lot are rejected, and therefore not sold below the reference price. And this is the thing that I said we need to be careful of; there is no averaging across the lot. That even if you have 1,000 boxes and let’s say 25 of them are in such bad condition, there can never be sort of an averaging that results in any tomatoes being sold below the reference price. That is why we have the paperwork set up the way we do. Obviously, when there is a strong market with higher prices the condition defect claims processes do not come into play.
Roma or plum tomatoes regarded as specialty; are they subject to the Agreement?
Yes, they are subject to the Agreement and they are an open field tomato unless they are grown in a controlled environment.
Who governs the Agreement or monitors it?
The Commerce Department, (and it has been around for awhile) for 17 years. We have experience, the Agreement includes very strict reporting requirements and we monitor the compliance on a daily basis.
If I am a Mexican grower and I sell to my subsidiary in the U.S., and then the subsidiary delivers free consignment tomatoes to a selling agent in the U.S., how will the price be determined?
Every Mexican signatory needs to ensure that the tomatoes are being sold at or above the reference price thru their selling agent. There is no free consignment. It is important to note that the obligation to meet the requirements of the Agreement starts at the signatory. They then enter into the contract with their selling agent to ensure the requirement to the Agreement and the minimum price requirements are met with the first sale to the non-affiliate.
If a U.S. seller sells a non-defective load of Mexican tomatoes to a U.S. buyer below the reference price, is that a violation of PACA?