Antidumping Investigation Back on for Imported Mexican Tomatoes

In September, the contentious debate between Florida and Mexican tomato growers seemed to hit a smooth patch when both parties agreed to a new suspension agreement that provides protections to U.S. tomato growers. The agreement “suspended” an antidumping investigation by the U.S. Commerce Department, which had begun in May after a 2013 suspension agreement was terminated.

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That all seemed to hit another snag just a month later when the Florida Tomato Exchange (FTE) requested the Commerce Department to continue its antidumping investigation. The FTE noted it was taking the action “reluctantly,” but felt it was necessary due to Mexico’s signaling intentions to challenge the new suspension agreement both legally and politically. On Oct. 17, the Commerce Department notified the FTE it would continue the investigation.

On Oct. 22, the Commerce Department announced a final dumping margin of 21%, resulting from the resumed investigation. In other words, Mexican tomatoes were being sold in the U.S. market at 21% fair market value.

Legal and Political Motivation
A statement by the FTE noted reasons why it was requesting to continue the investigation. “In an Oct. 3 letter to the Commerce Department, the Mexican growers’ associations signaled a strong likelihood that they would challenge the new suspension agreement in court. There also have been multiple public reports that the Mexican tomato industry will do everything possible to renegotiate the agreement, and they are counting on strong action by the Mexican government to insist on changes.

“Additionally, both the Confederation of Associations of Agriculture State of Sinaloa and Red Sun Farms – a large Mexican producer – have pending litigation against the U.S. government at the Court of International Trade. The appeal by Red Sun Farms argues that Commerce did not lawfully terminate the 2013 Suspension Agreement, thereby asserting the old suspension agreement should be reinstated.

“These actions clearly indicate the Mexican industry plans to force a renegotiation of the agreement by withdrawing at some point in the near future.

“This is a tactic the Mexican tomato industry used three times in the past to avoid sunset reviews and to negotiate new agreements that were more favorable to them. Those resulting agreements failed to protect the U.S. tomato industry from the injury caused by dumped Mexican tomatoes. Given this precedent, plus the ongoing actions of the Mexican industry, the FTE has no choice but to request a continuation of the investigation.”

Mexico Reacts
Associations representing 100% of Mexico’s tomato growers issued a statement pushing back on the FTE’s request to continue the antidumping investigation. The statement noted: “The Mexican tomato industry negotiated its agreement with the Commerce Department in good faith and has every intention of abiding with that agreement throughout its term. So long as the agreement is administered in good faith and in accordance with its terms, the Mexican industry has no intention of ever withdrawing. The Oct. 3 letter that the Mexican industry filed with the Commerce Department did not signal an intent either to challenge that agreement in court or to renegotiate the agreement.

The letter simply corrected the characterization of data and certain unfounded allegations put on the record after the agreement was signed.”

“We intend to abide by this agreement we negotiated with the Trump Administration,” said Guillermo Jimenez, President of Association of Mexican Horticulture Protected Agriculture, Mexico’s largest growers’ association.

Suspension Agreement to Continue?
According to the FTE, the suspension agreement signed in September will remain in effect during the resumed investigations. With the completion of the Commerce Department investigation, the International Trade Commission (ITC) will hold hearings on Oct. 24 to determine if U.S. tomato growers were injured by Mexican imports. A final injury determination is expected from the ITC by Dec. 4, at which point the full investigation, which first began in 1996, will be complete.

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Duties of 21% will not be imposed as long as the agreement is in effect. Alternatively, if there is a negative finding [for dumping and/or harm], the proceeding will end, the suspension agreement will be terminated, and there will be free trade.