An otherwise obscure ruling by the Department of Commerce in a 16-year-old case involving tomatoes has prompted warnings of a trade war with Mexico and taken on outsize election-year significance in the crucial swing state of Florida.
The dispute pits Florida’s agricultural lobby against the Mexican government and a coalition of angry growers south of the border.
Depending on who you believe, Thursday was either a bad day for lovers of both free trade and vine-ripened romas — a prelude to higher prices — or the first step in the renaissance of a U.S. tomato industry that has been in decline.
At issue: an agreement that has long set a minimum price on Mexican tomatoes imported into the United States. At the time that the deal was reached in 1996, Florida farmers had feared being undercut by cheap produce entering the American market under the terms of the North American Free Trade Agreement.
Florida growers say the agreement is no longer relevant, and asked the Commerce Department to set it aside so they can pursue an “anti-dumping” case against Mexico. If they are successful, and show that Mexican tomatoes are unfairly priced, Commerce would then impose import duties on the Mexican fruit.
The Obama administration — caught between the Florida growers, U.S. retailers such as Wal-Mart that rely heavily on Mexican produce and the diplomatic intricacies of U.S.-Mexican relations — said Thursday that the agreement had to be set aside. The Commerce Department said in a preliminary decision that Florida growers, who voluntarily accepted the 1996 agreement, should be free to pursue their complaint now if they want to.
“We feel if we don’t draw a line in the sand so we can trade produce in this hemisphere freely and fairly there will be no domestic production of tomatoes in this country,” said Reggie Brown, vice president of the Florida Tomato Exchange, one of several grower groups that wants taxes imposed on Mexican imports. Brown said three major growers abandoned the business last year and those that remain probably will lose $100 million to $200 million.
Mexican growers and officials, proud of what they say are their more romantic and tasty vine ripened tomatoes, warned of retaliation if the administration goes too far in helping American growers.
Mexican tomato exports to the United States have nearly quadrupled in value under the 1996 agreement, to around $2 billion annually. During winter months in particular, Mexican produce can account for as much as half of the “fresh market” tomatoes available in supermarkets or sliced for sandwiches at restaurants. According to Agriculture Department statistics, the harvested tomato acreage in the United States peaked at around 130,000 in 2001, and is now down to 99,000 as of last year.
“You can imagine the effect this may have on the U.S. consumer,” Mexican economy minister Bruno Ferrari said in a telephone interview, warning that prices could rise.
Faced with possible U.S. action, Ferrari said his government would defend an industry that now employs an estimated 350,000 people.
“We don’t want this to create problems” in what has become an increasingly important trade relationship, Ferrari said.
Martin Ley, spokesman for a coalition of Mexican growers, said the Commerce Department ruling seemed particularly harsh because he was scheduled to meet U.S. officials Friday to discuss ways to resolve the matter.
From Mexico’s perspective, he said, it is being penalized for its success. Ley said Mexican growers have done more to expand the varieties of tomatoes available in stores and respond to consumer demand
“The sun comes out for both Florida and for us. We have the same 24 hours,” he said. “They are trying to attack their strongest and most efficient competitor.”