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Tomato Suspension Agreement controversy continues

Did anyone really expect a soft landing?

The importation of fresh Mexican tomatoes has met vehement protests from Florida growers for decades.

The heat rose on May 7, when the U.S. Department of Commerce, under strong pressure from Florida growers, withdrew from the Tomato Suspension Agreement that had been in force for 23 years. In May, the DOC imposed a 17.5 percent tariff on Mexican tomatoes after the two sides failed to renew an earlier agreement that halted a U.S. anti-dumping probe.

The Commerce Department then had to consider what was fair to all interests — Mexicans, Floridians and American consumers — in the importation of Mexican tomatoes.

Finally, on Aug. 20, the DOC announced that Mexican tomato growers had reached a deal with the U.S. government to avoid an anti-dumping investigation.

This seems like good news on the surface.

But Lance Jungmeyer, president of the Fresh Produce Association of the Americas, noted that Mexican tomato growers and importers are “profoundly concerned that a provision in the draft agreement appears to require inspections of up to 92 percent of all lots of tomatoes from Mexico at the U.S. border.

“At that level, the inspections are not only unnecessary, they also have the potential to destabilize the U.S. tomato market,” Jungmeyer said. “U.S. importers and marketers of Mexican tomatoes will bear what amounts to punitive costs associated with such levels of inspection. Because of the sheer volume of tomatoes shipped north from Mexico to the U.S., we can expect the inspections to create substantial delays that compromise the quality, affordability and availability of tomatoes to American consumers and will create bottlenecks for other goods crossing the border.”

Unsurprisingly, the Florida growers simultaneously showed their support of the inspections on Mexican tomatoes.

An Aug. 21 release from Michael Schadler, executive director of the Florida Tomato Exchange, said, “The agreement establishes unprecedented measures and enforcement provisions that will help protect American tomato farmers from injurious dumped Mexican tomatoes.

"The domestic tomato industry commends the Commerce Department and the Mexican industry for coming to an agreement that recognizes the need for stronger enforcement," he said. "We are committed to working hard with the Commerce Department to make sure the new agreement works.”

Schadler continued, “The new tomato antidumping suspension agreement includes major provisions requested by U.S. growers to improve enforcement and monitoring of the agreement. The Mexican industry conceded on core provisions such as border inspections of all Mexican round, roma and bulk grape tomatoes, and improved compliance and monitoring tools. Without these and other new provisions, the agreement will not eliminate the injury being caused by unfairly traded Mexican tomatoes.

Protocol for the DOC calls for a 30 day comment period on its Aug. 20 decision.

Jungmeyer noted on Aug. 21, “If the U.S. and Mexico ultimately fail to ratify to the newly revised Agreement by Sept. 19, it will trigger a further series of anti-dumping investigations and the U.S. duties on Mexican tomatoes will continue at 17.5 percent and could rise to as much as 25.5 percent.

Richard Owen, vice president, global membership and engagement for the Produce Marketing Association, said, “Based upon reports from the USDoC, here is what you need to know":

  • The agreement sets minimum reference prices for various tomato varieties, including organic.  
  • The draft agreement begins a 30-day notice period which could allow the USDoC and the Mexican tomato industry to sign a final agreement on Sept. 19. Public comment will be taken during this time. It is expected that the agreement will preclude the imposition of additional antidumping duties that would have been imposed based on initial analysis conducted as a part of the investigation.
  • If a new agreement is signed on Sept. 19, The USDoC will suspend the ongoing AD investigation without releasing a final determination.
  • Importers would be entitled to a reimbursement of cash deposits made from when the anti-dumping investigation was reactivated on May 7.

Owen said, “PMA is pleased that a new draft agreement has been reached to bring certainty to the marketplace. Implementation will be critical to ensure the expectations of all parties are achieved and that the industry can continue to supply consumers with high-quality, year-round products at affordable prices. PMA looks forward to seeing details of the agreement, particularly provisions that outline the level of increased inspections that will impact the supply chain.”

Dante Galeazzi, president and CEO of the Texas International Produce Association, said Aug. 22 that he would be discussing the DOC decision with his members. “We are all going to look this over, consider the next steps and determine what’s best for everybody.”

Schadler indicated: “The entire Commerce Department negotiating team, under the leadership of Under Secretary Gilbert Kaplan, Assistant Secretary Jeffrey Kessler and Deputy Assistant Secretary Lee Smith, did a great job in making this new agreement possible. We look forward to this agreement being implemented in 30 days from now.”