By Clint Thompson
The termination of the United States-Mexico Tomato Suspension Agreement is a win for the domestic industry and should increase domestic production across the country. That’s the hope shared by Robert Guenther, executive vice president of the Florida Tomato Exchange.
It was announced on April 14 that the U.S. Department of Commerce (DOC) terminated the 2019 United States-Mexico Tomato Suspension Agreement, which will become effective on July 14.
Dumping Took Its Toll
Mexican tomato companies have consistently dumped their product into the U.S. market, despite five suspension agreements since 1996. Imports surged nearly 400%, capturing more than 70% of the U.S. market. The domestic market share dropped from 80% to 30%. The Florida Tomato Exchange shared the data when it applauded the DOC’s decision.
“We appreciate the efforts of the administration to recognize that the tomato suspension agreement is an unworkable model for addressing unfair trade practices. The decision is an important step toward reestablishing fair trade, leveling the playing field and assuring a strong and robust domestic tomato industry,” said Tony DiMare, president of DiMare Fresh.
The domestic industry will benefit from the termination. Growers from Florida to Georgia to California should increase acreage as a result.
“California has a very limited fresh tomato market. There could be some more increases in that area; certainly, up the east coast, in the south with Georgia and Tennessee,” Guenther said. “Alabama used to be a pretty big tomato grower, but it’s not as much anymore. There could certainly be a move to increase acreage. I think in Florida, too, there might be some folks who come back into the business or expand current business.”
Market Access Remains
The suspension agreement was an agreement between the U.S. government and growers in Mexico that Mexican growers would not sell any tomato below the reference price. It was reviewed every five years. The DOC found that Mexican tomatoes were being dumped in the United States at high levels in 2019, and the U.S. International Trade Commission (ITC) confirmed the material injurious effect of that dumping on the American tomato industry.
This led to the termination of the agreement. Guenther remains adamant that the end to the agreement will not disrupt the current market access to tomatoes nor will it impact consumer prices.
“Quite frankly, we believe that when the suspension agreement is terminated, which is July 14 of this year, the market is not going to stop. The tomato market in Mexico, like a lot of other fruit and vegetable markets, is geared toward exporting to the United States. That’s not going to stop,” Guenther said. “There’s no reason to believe that tomatoes are going to stop coming across the border. There’s no reason to believe there’s going to be increases in prices. This agreement has been terminated multiple times over the last 29 years. There’s no evidence that the loads have significantly declined, in terms of them coming over, when it’s been terminated. There’s no evidence that prices have shot up for tomatoes to the consumer. There are theories around that, but there’s no hard evidence.”
Not Up For Negotiation
The remaining days leading up to the July 14 termination date are critical for the domestic tomato industry. Guenther believes the Mexican government will attempt to negotiate a new agreement, even amid the mounting evidence of dumping of Mexican imported tomatoes. The Florida Tomato Exchange does not support a new agreement.
“We are confident that the administration will hold firm. We have a positive finding, both from the DOC and ITC of dumping and injury to the domestic industry. There’s no debate about that. Everybody has had their day in court,” Guenther said.
“We’re on a path forward of seeing these duties being put in place because of the dumping over almost the last 30 years. We expect they will try to come in and renegotiate another suspension agreement. We are very solidly not supporting any new suspension agreement whatsoever. There is no room for negotiation anymore.”