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U.S. ends Mexican tomato price pact, raising trade war risk

Mexico exported $2.1 billion worth of tomatoes last year and 93 percent went to the United States. The decision to end the pact will let American growers seek duties on Mexican tomatoes, which may spark a trade war, a produce association says.

New York Times (2011)

Mexico exported $2.1 billion worth of tomatoes last year and 93 percent went to the United States. The decision to end the pact will let American growers seek duties on Mexican tomatoes, which may spark a trade war, a produce association says.

WASHINGTON — The United States is ending an accord that for 16 years set prices for Mexican tomato imports, siding with Florida farmers over the objections of Mexico's government and produce buyers who warned of a trade war without the agreement.

Florida tomato farmers joined by colleagues in other states said the 1996 deal, adopted in place of an antidumping investigation, is outdated and ineffective. Buyers of tomatoes such as Wal-Mart Stores, the world's largest retailer, wanted to keep it in place, saying it promotes price stability.

The Commerce Department issued a preliminary decision to end the pact. The step will let American growers seek duties on Mexican tomatoes, which may spark a trade war, according to the Fresh Produce Association of the Americas. The Nogales, Ariz., importers group said this month that the dispute was driven by election-year politics, a claim U.S. growers denied.

"The decisionmaking process certainly seems one-sided, and seems to be dictated by politics rather than policy," Arturo Sarukhan, Mexico's ambassador to the United States, said Thursday in an emailed statement.

The dispute reopens a rift between the United States and its third-largest trading partner. The United States last year imported $8.5 billion in agriculture and livestock goods from Mexico, more than any other nation, according to the Commerce Department. The United States sent $8.7 billion of those products to Mexico.

Mexico exported $2.1 billion worth of tomatoes last year, 93 percent to the United States, the Agriculture Ministry said.

The Commerce Department said it will close its investigation into whether Mexican tomatoes were sold in the U.S. market below cost, an inquiry that was suspended when the pricing agreement was adopted. Ending the investigation terminates the pricing agreement, the agency said in memo on its preliminary findings. A final decision is due in nine months, the agency said.

Mexico's ambassador cited a 17-year conflict with the United States over cross-border trucking, in which Mexico imposed tariffs on $2.4 billion of American goods, to show the nation is prepared to challenge the U.S. decision.

"Mexico will respond: You should ask those who were in the Mexican crosshairs over the trucking dispute," Sarukhan said. "When Mexico aims, Mexico hits the target."

The tariffs were lifted last year after a Mexican trucking company won a cross-border permit.

The U.S. decision is "welcome news to domestic growers and the workers who have suffered under an outdated and failed agreement," Reggie Brown, executive director of the Florida Tomato Exchange, a growers' group, said Thursday in a statement. "The domestic industry has jumped through every hoop put in our path by our opponents who simply want to protect the sweetheart deal that they've enjoyed for far too long."

U.S. ends Mexican tomato price pact, raising trade war risk 09/27/12 [Last modified: Thursday, September 27, 2012 6:51pm]
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