US and Mexico resolve tomato trade spat
Mexican producers have reached a deal with the US to halt an anti-dumping investigation that had led to the imposition of 17.5 per cent duties on tomatoes, resolving a lingering trade spat between the two neighbours and trade partners.
Mexico supplies half the tomatoes eaten in the US and is the world’s largest exporter of the fruit.
Facing pressure from Florida growers and Republican politicians in the state, the US Department of Commerce resurrected a long-paused anti-dumping investigation and imposed duties that Mexico said would impose costs of $350m a year on the $2bn industry.
The Trump administration, which temporarily imposed duties on Mexican steel and aluminium and threatened to slap tariffs on all Mexican exports to the US unless it curbed illegal immigration, announced in February that it would impose tomato duties that had been on ice for more than two decades unless a deal were reached by May.
That proved impossible — Mexico’s deputy economy minister, Luz María de la Mora, told the Financial Times at the time that agreeing a reference price had been the stumbling block.
The anti-dumping probe had been on hold since 1996 under a series of so-called suspension agreements during which time Mexican tomato exports to the US surged. In the 1980s, Americans ate only 5.5kg of tomatoes a head per year.
But with greater availability from Mexico, that amount rose to 10kg by 2017, according to Ms de la Mora, who said US producers alone would be unable to meet domestic demand.
An agreement was ultimately reached at midnight on Tuesday. Mexico’s economy ministry, which oversees foreign trade, expressed its “satisfaction” at the deal, which it said would come into force on September 19. There was no immediate reaction from the Florida Tomato Exchange.
Wilbur Ross, US commerce secretary, said on Wednesday that the agreement “meets the needs of both sides and avoids the need for anti-dumping duties” of as much as 25 per cent.
The draft agreement sets new reference prices for tomatoes ranging from 31 cents to 59 cents per pound, with organic tomatoes priced 40 per cent higher. The previous accord, from 2013, set prices between 25 cents and 59 cents per pound.
“The draft agreement also closes loopholes from past suspension agreements that permitted sales below the reference prices and includes a brand-new inspection mechanism to prevent the importation of low-quality, poor-condition tomatoes from Mexico, which can have price suppressive effects in the market,” the US commerce department said.
It said the move “exemplifies the Trump administration’s priority of enforcing our trade laws, while ensuring that trade agreements are fair, reciprocal and benefit American farmers, workers, businesses, and consumers”.
Mexico said it had been “indispensable” to reach a new deal to avoid damage to a vital export sector and a knock-on effect on jobs.
“With this objective as the main goal, throughout all the negotiations in the last few months, Mexican producers displayed willingness and flexibility to reach a new accord that would benefit all parties involved,” the economy ministry said.
But Mexican producers were unhappy at the new controls written into the accord.
“The deal includes the controversial latest proposal to inspect at the border 92 per cent of trucks to check quality; increases in the reference prices for speciality tomatoes and a rise in the price of organic tomatoes 40 per cent above the price of conventional ones,” the Mexican Association of Protected Horticulture and the producers associations said.
The deal is next due for revision in September 2024.
Mexico had averted the threat of across-the-board US tariffs by beefing up border security and clamping down on Central American migrants heading north through its territory.
Donald Trump, US president, praised Mexico’s efforts so far, which have resulted in a sharp fall in migrant numbers, but the deal reached in June averting tariffs gave Mexico a 90-day deadline, which is up on September 5, to reduce migrant flows to his satisfaction.