The Florida Tomato Exchange says the U.S.’s recently announced plans to withdraw from a trade agreement with Mexico are good news for U.S. growers and consumers, and is hopeful it could ultimately help to reverse the decline of the U.S. industry.
The U.S. Commerce Department said on Thursday it was giving 90 days’ notice before terminating the six-year-old tomato suspension agreement, which prevents anti-dumping cases against fresh tomato imports from the Latin American country.
The announcement followed the Florida Tomato Exchange’s request to the Department in mid-November to end the agreement, and more recently a joint congressional letter with bipartisan support sent to Commerce Secretary Wilbur Ross highlighting the problems the U.S. industry has been facing.
Michael Schadler, executive vice president of the Florida Tomato Exchange, told FreshFruitPortal.com the withdrawal is “very good news” for the U.S. tomato industry.
“We support free trade – we’re not trying to fight against NAFTA [the North American Free Trade Agreement]. This is strictly a trade enforcement issue. This is about dumping, which is illegal under U.S. trade laws and it’s illegal under NAFTA,” he said.
“We are simply trying to work within the confines of NAFTA – in alignment with the WTO [World Trade Organization] – to make sure that there are no unfair trade practices going on by Mexico.”
The Florida Tomato Exchange first brought an anti-dumping lawsuit against the Mexican industry in 1996. At that time, Mexican imports into the U.S. were mainly an issue for Florida, as Mexican production was lower and focused on the November to May period – when almost no other state produced significant volumes, Schadler explained.
But over recent years, Mexican production has increased significantly and has evolved into a year-round deal, impacting U.S. growers throughout the country.
Schadler emphasized that the U.S. industry’s push to withdraw from the suspension agreement was “not a political maneuver to block market access” of Mexican tomatoes, but to an attempt to prevent alleged circumvention of the minimum pricing of the deal and the “loopholes” used “even when the terms of the agreement were technically met”.
“There are certainly direct instances of circumvention, but also instances where they were able to work within the system, based on the structure of the tomato industry and based on the suspension agreement governing that trade,” he said. “It just wasn’t sufficient to protect U.S. growers.”
In addition, he claimed U.S. growers have been further disadvantaged by “very large subsidies” from the Mexican Government to tomato growers, although this particular issue is not related to the suspension agreement.
The effects of Mexican tomato imports have been devastating for the U.S. industry, Schadler said. He estimated that in Florida alone three to four companies leave the industry every year.
“There are really only about 20 growers left of any size, whereas 30 years ago there were 250. So there’s been a tremendous decline in production and in the number of players involved in the industry,” he said.
He added that over recent months U.S. growers around the country have been calling their representatives in Congress to make sure they understand the situation and know that it is a national issue.
“If it’s not taken care of then this downward trajectory is just going to continue – more companies are going to go out of business, and ultimately this is going to be bad for consumers. If you have a domestic industry that is largely going to go out of business and a foreign industry that is taking market share, prices ultimately are going to go up.”
Schadler expected the antidumping investigations would last around six months, meaning that later this year the U.S.’s allegations – and Mexico’s defense – could be heard in court.