Why It’s Time to Dump Tomato Suspension Agreement

Why It’s Time to Dump Tomato Suspension Agreement

display of tomatoes at 2018 PMA Fresh Summit

Florida’s tomato industry has been particularly hard hit by Mexico’s dumping of product during the state’s traditional market window.
Photo by Frank Giles

Last year, I wrote an article and noted that 2018 would be a busy one for the Florida Tomato Exchange (FTE) because the Tomato Suspension Agreement was scheduled for a “sunset review.” The suspension agreement is a deal between the U.S. Department of Commerce and the Mexican tomato industry that suspends an antidumping investigation of tomato imports from Mexico. In exchange for this suspension, Mexican tomato shippers agree not to sell below certain floor prices. Unfortunately, the agreement has never worked, and dumping continues to harm American tomato growers.

Possible Outcomes
The sunset review of the agreement is still in progress, and there are four possible outcomes that could result in the coming months: 1) the agreement could be renewed; 2) the agreement could be replaced with a renegotiated deal; 3) the suspension could be terminated and the antidumping investigation resumed; or 4) there could be a return to free trade. From the outset, the FTE has been adamantly opposed to renewal. The structure of the current agreement is unenforceable, and even when the agreement works, there are numerous loopholes for Mexican exporters to get around the intended protections. Therefore, our preference has been for a renegotiated agreement.

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Over the last year, we’ve provided the Commerce Department with various ideas on how to fix the agreement so it would actually work as intended. In turn, the department has proposed many of these ideas to the Mexican exporters. Unfortunately, the Mexican industry has not shown a willingness to seriously address these proposals. In short, without getting into confidential details, the last year of negotiations have been mostly fruitless. That is why the FTE is now requesting the Commerce Department to terminate the suspension, which would allow the antidumping investigation to resume. This is all completely compatible with U.S. trade law, the North American Free Trade Agreement, and the proposed United States-Mexico-Canada Agreement.

Up until about 10 years ago, this was mainly a Florida vs. Mexico trade dispute focused on the November-to-April tomato market, but the incredible expansion of Mexican tomato production over the last decade has made this a national issue, covering all 12 months. Even with the supposed protections of the suspension agreement in place, U.S. summer tomato producers now are feeling the impact of dumped Mexican tomato imports, just as Florida has every winter for the last 30 years. Since 2002, Mexican imports have increased 188% during the May-to-October window, nearly double the rate of increase compared to the November-to-April time frame.

Request for Termination
Given this national scope, the FTE has joined with tomato growers across the country requesting the current suspension agreement be terminated.

This request was amplified on Feb. 1, when Sen. Marco Rubio (R-FL) and Congressman Ted Yoho (R-FL) sent a letter to Commerce Secretary Wilbur Ross urging him to terminate the agreement. The bipartisan letter was co-signed by 48 members of Congress from Alabama, Arkansas, California, Florida, Georgia, Michigan, New Jersey, North Carolina, Pennsylvania, Puerto Rico, South Carolina, and Tennessee. At the time of this writing, the Commerce Department has agreed to terminate the current suspension agreement effective May 7. Between now and then, a new agreement could still be negotiated. If that doesn’t happen, the suspended antidumping case will automatically resume on May 7.

More than Tomatoes
The experience of Florida’s tomato growers was clearly a harbinger for the national tomato industry. Similarly, the challenge facing tomato growers is no longer unique to just tomatoes. As Rubio said in a press release on this matter: “The U.S. tomato industry has been the canary in the coal mine for domestic fruit and vegetable production over the last three decades. Immediately terminating the suspension agreement will reinvigorate the antidumping investigation on fresh tomatoes from Mexico and send the message that the U.S. will ensure vigilant enforcement of our existing trade laws and trade agreements.”

The canary in the coal mine is a warranted analogy. Whether it is strawberries, peppers, cucumbers, or squash, many growers around the country are beginning to experience the same challenges as their tomato brethren when it comes to Mexican imports. This is not a call to end free trade, but lessons should be learned from the tomato industry’s experience. Mexican growers already have tremendous advantages over their American counterparts when it comes to wage rates and the overall regulatory environment. Without strong enforcement and legal recourse against dumped imports or production subsidies, the downward trajectory for many fruit and vegetable growers in the U.S. will continue.