A new draft of the Tomato Suspension Agreement agreed upon by the U.S. Department of Commerce and Mexican tomato growers will end the current duties on tomatoes shipped from Mexico to the U.S., but a provision in the draft agreement that appears to require inspections of up to 92% of all lots of tomatoes from Mexico at the U.S. border raises concern among importers.
In statement on its website, the Nogales, Ariz-based Fresh Produce Association of the Americas said that inspection provisions in the proposed new Tomato Suspension Agreement will clog traffic at the border and damage U.S. tomato markets.
“At that level, the inspections are not only unnecessary, they also have the potential to destabilize the U.S. tomato market,” FPAA President Lance Jungmeyer said in the statment. “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.”
Florida tomato growers, however, hailed the Commerce Department’s new tomato suspension draft.
“After 23 years of suspension agreements that never worked to protect American tomato growers from injurious dumping of Mexican tomatoes, the Mexican tomato industry agreed last night to a strong new suspension agreement, which U.S. growers support,” Executive Vice President of the Maitland-based Florida Tomato Exchange Michael Schadler said in a statement. “The agreement establishes unprecedented measures and enforcement provisions that will help protect American tomato farmers from injurious dumped Mexican tomatoes.”
The Exchange had called for strong enforcement provisions, and Schadler said the new tomato anti-dumping 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,” Schadler said. “Without these and other new provisions, the agreement will not eliminate the injury being caused by unfairly traded Mexican tomatoes.”
The proposal requires a 30-day comment period, after which on Sept. 19 Commerce Department officials and the Mexican growers could sign the final agreement, according to a department news release. Once signed, Commerce will suspend its anti-dumping investigation without issuing a final determination.
The long-simmering trade issue between U.S. and Mexican fresh tomato traders heated back up on May 7 when the Commerce Department terminated the 2013 Tomato Suspension Agreement on Fresh Tomatoes from Mexico. Commerce officials reopened their investigation into alleged below-market-price dumping of Mexican tomatoes into the U.S. and began assessing a 17.56% duty on Mexican shipped to the U.S.
The heightened inspections would begin about six months after the new Tomato Suspension Agreement, if it is finalized on Sept. 19, according to FPAA.
In addition to the wide-ranging inspection provision under the new agreement, the draft suspension includes enforcement provisions Commerce officials said will eliminate the “injurious effects” of Mexican tomatoes, as well as price suppression and undercutting. The draft agreement sets reference prices for rounds and romas at 31 cents per pound, stem-on tomatoes at 46 cents per pound., tomatoes on the vine at 50 cents per pound, specialty loose tomatoes at 49 cents per pound, and specialty packed tomatoes at 59 cents per pound, with organic tomatoes priced 40% higher than non-organics.
FPAA estimates it will cost $220 million to construct the warehouse space needed for enhanced inspections, as well as other related costs of close to $50 million per year.