The US has averted a tomato trade war with Mexico
By Rachid Antari
Oklahoma City. U.S.A−The U.S Commerce Department and Mexican tomato growers have signed a tentative agreement on Saturday that averted a costly trade war triggered primarily by the United States decision last year to pull out of the a 1996 bilateral tomato trade pact that followed the signing of NAFTA in 1994.
The agreement will prevent imports of fresh or chilled tomatoes from Mexico from being sold in the U.S. below production costs.
The deal, which is expected to be in effect on March 4th after a public comment period, is supposed to more than double the reference price on select Mexican tomatoes. Currently, the reference price is 21.6 cents in winter and 17.2 cents in summer.
Following complaints from U.S tomato growers, The Commerce Department in September issued a preliminary decision to end the pricing accord that has been in place since1996. They argued that the pact is outdated and easily manipulated.
In the face of The Commerce Department’s actions, the Mexican government has said they would consider retaliatory action if the agreement were to be terminated. Mexican growers and their government are backed in their effort to keep the Tomato Trade pact in place by U.S. tomato importers such as retail giant Wal-Mart Corporation, who are saying that scrapping the agreement, would eventually cause domestic prices to rise and other supply issues.
According to the Census Bureau, the U.S. imported $1.8 billion worth of fresh or chilled tomatoes from Mexico in 2011, a 58 percent increase from 2008.
“I am pleased that we were able to come to an agreement on fresh tomato imports from Mexico that restores stability and confidence to the U.S. tomato market and meets the requirements of U.S. law,” U.S. Commerce under Secretary for International Trade Francisco Sanchez said in a statement.
According to a Fact Sheet released by the U.S. Department of Commerce concerning the new agreement, The Agreement will help stabilize North American tomato trade and foster unprecedented cooperation among the North American tomato industries to address common commercial challenges and promote new markets for their products.
There also will be more enforcement from the Commerce Department as it will actively monitor signatory compliance with the Agreement through its well established mechanisms which include quarterly signatory reporting requirements and on-site examinations of signatory growers’ pricing and distribution practices.
