The federal government says a new tomato agreement with Mexico will protect domestic producers, but produce importers in Nogales – where more than $500 million of Mexican tomatoes enter the United States annually – say that parts of the new deal could create “a non-tariff trade barrier” that would drive up prices and hurt importers’ business.
The draft version of a new Tomato Suspension Agreement, signed by the United States and Mexico on Tuesday, would eliminate a tariff that has been applied to imported Mexican tomatoes since the United States withdrew from a previous version of the agreement in May.
It would also raise the minimum prices for imported tomatoes and implement a new policy on inspections of the imported produce.
In a news release issued Wednesday, the U.S. Department of Commerce wrote that the draft agreement “ensur(es) that the domestic tomato industry will be protected from unfair trade.”
The Fresh Produce Association of the Americas, a Nogales-based trade group that represents local produce importers, said in a news release that it is “profoundly concerned” that the new inspection policy could mean that almost all Mexican tomatoes entering the country face inspection.
“U.S. importers and marketers of Mexican tomatoes will bear what amounts to punitive costs associated with such levels of inspection,” FPAA President Lance Jungmeyer said in the release.
The FPAA also took issue with the increased prices for organic tomatoes, which it said could dampen U.S. demand.
“We worry that U.S. market will not be able to bear this dramatic cost increase,” Jungmeyer said in the release.
The draft agreement is open for public comment until Sept. 19.
The Tomato Suspension Agreement, first signed in 1996, halted the U.S. government’s investigation into alleged tomato “dumping” by Mexican producers (selling products at below-market rates) and set price floors on imported Mexican tomatoes.
The agreement had been updated several times since the 1990s, but the Trump administration pulled out of the deal on May 7, following complaints by Florida tomato growers that they were losing market share to unfairly priced Mexican tomatoes. The move effectively reopened the antidumping investigation and immediately imposed a 17.5-percent tariff on all Mexican tomato imports.
The new suspension agreement would set price floors for imported Mexican tomatoes at 31 cents per pound for round and Roma tomatoes, 46 cents per pound for stem-on tomatoes, 50 cents per pound for tomatoes on the vine, 49 cents per pound for specialty loose tomatoes, and 59 cents per pound for specialty packed tomatoes, plus an additional 40 percent for organic products in each category.
Those numbers represent an increase over terms set out in the previous version of the agreement, signed in 2013.
Before the United States withdrew from the deal in May, Jungmeyer warned that, “without a Suspension Agreement, produce warehouses in Southern Arizona will face extreme hardship and potential closure.”
Still, the volume of tomato imports in Nogales increased in May, June and July compared to the same months in 2018.