Friday, June 21, 2024

Mexico reaches a deal on tomato exports but with a logistical cost

Peace is drawing near in the tomato war between Mexico and the United States.

Tomato producers said they reached an agreement late Tuesday with the United States Department of Commerce that will remove tariffs on Mexican exports.

A committee of Mexican tomato producers and officials from the commerce department negotiated the deal in Washington D.C. over four days.

The United States imposed 17.5% tariffs on Mexican tomatoes in May after the two countries failed to renew an agreement that suspended a U.S. anti-dumping investigation that first opened 23 years ago.

However, the director of the Confederation of Agricultural Associations of Sinaloa, Mario Robles, said in a statement that a new deal was struck at midnight that “suspends the ongoing dumping investigation.”

Once the agreement takes effect, Mexican tomatoes will enter the United States tariff-free and all duties paid since May 7 will be returned to producers.

The Department of Commerce said the draft deal will be reviewed over a period of 30 days and signed on September 19 if both countries agree.

But one aspect of the agreement that is less pleasing to Mexican growers is that 92% of Mexican tomato trucks will be subject to quality control inspections.

The Department of Commerce said the inspection mechanism will prevent imports of “poor-condition” tomatoes that have “price suppressive effects” for the broader market.

Tomato producers said in July that the inspection requirement would create “a logistical tangle” at the border, given that 120,000 trucks a year would have to be inspected, a process estimated to take an hour and a half for each truck.

The new deal also sets reference prices for tomatoes and stipulates that organic tomatoes must be priced 40% higher than varieties that aren’t. The agreement is scheduled to be reviewed in September 2024.

If a deal had not been reached, tariffs could have increased to 25%, which would have had a significant impact on the Mexican tomato industry.

Mexico sends about US $2 billion worth of tomatoes to the United States annually, making it one of the country’s biggest fruit and vegetable exports along with avocados. About one million people work in the Mexican tomato industry.

Mexico overtook the Netherlands last year to become the world’s biggest exporter of the crop, of which 99.7% is shipped to the U.S.

Tomato growers in Florida have said that Mexican producers unfairly undercut U.S. farmers on price but Mexico denies the charge.

President López Obrador, who had warned that permanent tariffs on tomatoes could fuel migration to the United States, said today that he welcomed news of the deal.

Source: El Financiero (sp) 

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