By Michael Schadler
Suspension Agreement Purgatory
The never-ending story of the United States-Mexico Tomato Suspension Agreement added a new chapter over the last year when the Florida Tomato Exchange (FTE) issued a request to the Biden administration to terminate the 28-year-old agreement. So far, FTE has received no response.
The Tomato Suspension Agreement is an agreement between the U.S. Department of Commerce and Mexican tomato growers and exporters that suspends antidumping duties on imported Mexican tomatoes. In exchange, Mexican exporters agree to sell tomatoes to the U.S. market at prices that are at or above “reference prices” set in the agreement. Sounds good on paper, but over nearly three decades, it has never been enforceable.
Dumping Confirmed
Two different U.S. government investigations (in 1996 and 2019) confirmed that Mexican tomatoes were being dumped. When such an investigation finds that dumping occurred, the impacted industry (in this case, U.S. tomato growers) must go before the U.S. International Trade Commission (ITC) to prove that the dumping caused injury to domestic producers. The U.S. tomato industry won its case at the ITC in 2019. This would normally trigger antidumping duties, but the suspension agreement continues to prevent those duties from being imposed.
In June 2023, the FTE asked the U.S. Department of Commerce to terminate the agreement and finally impose the antidumping duties. The FTE’s argument is twofold.
First, the suspension agreement isn’t enforceable; it allows too many loopholes for dumped product to continue entering the U.S. when the volume of imports from Mexico surges. Tomatoes are a perishable product, and Mexican exporters can’t keep tomatoes in storage until market dynamics improve. When there is an oversupply of tomatoes in Mexico, there is enormous incentive to get the tomatoes to market even when the natural market price falls below the reference prices allowed under the agreement.
Second, U.S. trade law states that suspension agreements must be more beneficial to domestic producers than the underlying action being suspended (in this case, antidumping duties). We have 28 years showing that this is clearly not the case. Since 1994, when the North American Free Trade Agreement was enacted, Mexican tomato imports have increased nearly 400%. Mexico now controls over 65% of the U.S. tomato market. During that time, the U.S. industry’s market share has dropped from an 80% share to around 30% today.
It’s Not Just Florida
Historically, dumped Mexican imports hurt American tomato growers who produced in the winter and spring — primarily farmers in Florida. But over the last 15 years, the Mexican industry has expanded into a year-round tomato exporter, fueled in part by subsidies from the Mexican government. In fact, over the last decade, imports of Mexican tomatoes have increased during the summer months at more than double the rate compared to the traditional winter and spring seasons. This has put pressure on summer growers throughout the country in states such as California, Alabama, Arkansas, Georgia, Michigan, New Jersey, Tennessee and the Carolinas.
Mexican lobby groups are trying to paint this as just an issue for Florida growers, but that’s not true. The FTE is leading the fight and has received support from tomato growers in 13 different states, representing the vast majority of the country’s tomato production.
The widespread support among American tomato growers has resulted in significant political backing, including a congressional letter led by Senator Marco Rubio (R-FL) and Congressman Jim Costa (D-CA). That letter, sent to Commerce Secretary Gina Raimondo, was signed by 59 members of Congress from 11 different states. Senators Jon Ossoff (D-GA) and Cory Booker (D-NJ) also sent letters to Secretary Raimondo in support of tomato growers in their states who have asked that the agreement be terminated.
Unfortunately, despite near unanimous support from America’s tomato growers, and despite strong political support from both parties, our request seems to have fallen on deaf ears. As I’m writing this article, it’s been nearly 12 months since we first made our request for termination of the agreement, but we’ve yet to receive any response. It’s time to give American tomato growers the protection they have legally earned before our industry is completely destroyed.
Michael Schadler was the executive vice president of the Florida Tomato Exchange.