The United States and Mexico have settled a bitter trade dispute over tomatoes, with the United States shelving an anti-dumping investigation against Mexican growers and withdrawing from tariffs that could have led to shortages and significantly higher prices.
“For many years, there have been disputes over the roughly $2 billion worth of tomatoes that are imported from Mexico annually. These disputes led the Department to terminate an earlier suspension agreement and continue an investigation that could have led to duties of 25 percent for most Mexican tomato producers ” Secretary of Commerce Wilbur Ross said in a statement. “This draft agreement meets the needs of both sides and avoids the need for antidumping duties.”
Under the buzzer-beater agreement, reached just before a Wednesday deadline, 66 percent of imported Mexican tomatoes will be subject to inspection before crossing the border. It also dictates that Mexican growers raise the reference price of specialty tomatoes, and charge 40 percent more for organic tomatoes than conventional ones.
“This result is good news because it will allow the market to be kept open for our tomato exports to the United States,” Mexican Economy Minister Graciela Márquez tweeted Wednesday.
In early February, the U.S. Commerce Department announced it would be pulling out of the Tomato Suspension Agreement — which has set the parameters of the two nations’ tomato trade since 1996 — in part because of pressure from Florida lawmakers and the Florida Tomato Exchange, a U.S. trade organization, which alleged that Mexican growers were exploiting the agreement to dump cheap tomatoes into the United States and undermine American farms.
The termination of that pact called for a 17.5 percent tariff on imported Mexican tomatoes, which make up more than half of the U.S. tomato market. An April study from economists at Arizona State University predicted that the collapse of the agreement would leave Americans to pay 40 to 85 percent more for tomatoes by winter.
U.S. growers contend that as a result of Mexican practices, U.S. tomato production declined by 34 percent, from 4.4 billion pounds to 2.9 billion pounds, between 2002 and 2017. Mexican tomato imports to the United States skyrocketed 125 percent, from 1.6 billion pounds to 3.6 billion pounds, during the same period.
“American tomato growers shouldn’t have to lose their livelihoods because of a bad deal imposed upon them by their own government, and that’s exactly what was happening under the previous suspension agreement,” Senator Marco Rubio (R-FL.) said in a statement earlier this month. “The fact remains that the Mexicans have avoided serious negotiations for well over a year, preferring to use scare tactics and inflammatory rhetoric to try to force President Trump and Secretary Ross to back down on their commitment to ensure that American tomato growers are able to fairly compete in our own domestic market.”
Mexican growers fervently disputed accusations of dumping and unfair practices, arguing that Florida’s declining tomato industry was a result of its difficulty in producing high-quality, affordable products. Negotiations lasted months, and the U.S. insistence that all imported tomatoes be subject to quality inspection was a major sticking point.
Even lessened inspections will still constitute a major hurdle for Mexican growers, creating delays that will decrease the quality of the fruit before it reaches American consumers and create a bottleneck for goods being inspected at the border, Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said in a statement.
“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,” Jungmeyer said. “The inspection provision is essentially a non-tariff trade barrier whose ripple effects will not only damage the U.S. tomato market but many other industries that trade with Mexico.”
Mexico exports about $2 billion worth of tomatoes to the United States each year, which accounts for more than half of the U.S. tomato market, but the trade benefits Americans beyond mealtime. A November study from the University of Arizona estimated that Mexican tomatoes support about 33,000 jobs and contribute nearly $3 billion to the United States’ GDP.