News of the new tomato deal reached by U.S. and Mexico has been met with mixed reactions from industry bodies, with the Fresh Produce Association of the Americas (FPAA) saying it could damage the U.S. tomato market and the Florida Tomato Exchange (FTE) saying it will protect struggling U.S. farmers.
The FPAA says it's profoundly concerned about a provision in the draft that requires inspections of up to 92% of all tomatoes from Mexico at the U.S. border.
“At that level, the inspections are not only unnecessary, they also have the potential to destabilize the U.S. tomato market,” comments Lance Jungmeyer, president of the FPAA.
“U.S. importers and marketers of Mexican tomatoes will bear what amounts to punitive costs associated with such levels of inspection."
Jungmeyer notes that the FPAA commends the U.S. Department of Commerce and tomato producers in Mexico for their efforts to reach an agreement.
However, he urges both entities to consider their members’ concerns and those of many other American companies and consumers during the coming 30-day comment period.
The U.S. government would begin heightened inspections about six months after the new Tomato Suspension Agreement's ratification.
If passed, the deal would be finalized on September 19.
Inspection provision could serve as 'trade barrier'
The association warns that the agreement - as it stands - could negatively affect a number of U.S. industries.
“The inspection provision is essentially a non-tariff trade barrier whose ripple effects will not only damage the U.S. tomato market but many other industries that trade with Mexico,” Jungmeyer says.
The category makes up almost 20% of produce imports that flow from Mexico through the Nogales port of entry.
As the deal would increase the volume of tomatoes to be inspected, it would unnecessarily create a "bottleneck", slowing all goods at the border, he explains.
Moreover, FPAA has estimated that it will cost US$220 million to construct the warehouse space needed for these enhanced inspections. It estimates that other related costs will reach close to US$50 million per year.
Also, if the changes to the agreement are ratified, the reference price of Mexican organic tomatoes will likely rise. This could be by as much as 40% more than the price of conventional tomatoes, it says.
“We worry that the U.S. market will not be able to bear this dramatic cost increase,” Jungmeyer says.
“It will almost certainly and dramatically reduce the availability of organic tomatoes for the many U.S. consumers who prefer them.”
Florida Tomato Exchange praises deal
Meanwhile, the Florida Tomato Exchange (FTE) has voiced its support for the agreement. It says the agreement establishes enforcement provisions that will help protect American tomato farmers from dumped Mexican tomatoes.
"After 23 years of suspension agreements that never worked to protect American tomato growers from injurious dumping of Mexican tomatoes, the Mexican tomato industry agreed last night to a strong new suspension agreement, which U.S. growers support," it said.
Additionally, it says the deal's provisions will improve the enforcement and monitoring of the agreement. This, in turn, should help guard against unfair trading of the category, it explains.
"The Mexican industry conceded on core provisions such as border inspections of all Mexican round, roma and bulk grape tomatoes,
and improved compliance and monitoring tools," it said. "Without these and other new provisions, the agreement will not eliminate the injury being caused by unfairly traded Mexican tomatoes."
It added that the Commerce Department negotiating team did "a great job" in making the agreement possible.