Mexico to meet with the US this week to discuss the tomato agreement

The secretary of the Economy, Graciela Marquez, and the Secretary of Commerce of the United States, Wilbur Ross, will hold a meeting in the framework of CEO Dialogue, to discuss the tomato suspension agreement, which expires on May 7. "I have asked to have a bilateral meeting with Secretary Ross within that meeting, but we are going to have it somewhere else. We have asked for a bilateral meeting with the secretary to discuss the tomato issue," said Graciela Marquez during a press conference in Mexico City. The secretary said that in the framework of the meeting, which will take place on April 11 and 12, they would also discuss other topics of interest to both countries.  

At the same time Mexican producers urged the United States International Trade Commission (ITC) to discuss the tomato suspension agreement on May 7, that is, before the application of a 17.56 percent tax on imports.

On May 9, the commissioners will vote to decide if they continue with the agreement or if the US tomato market will operate freely for the first time in 22 years. However, this vote will take place two days after the 90-day deadline that began to run on February 7, when the US Department of Commerce notified its intention of getting out of the agreement that stopped the anti-dumping investigation against exports to that country since 1996. 

"This could interrupt the Sunset process that would prevent the ITC from granting its final determination in the absence of an agreement," the producers said after attending the organization for a hearing on Thursday, March 21, in Washington, DC. There, the representatives of the Mexican Association of Protected Horticulture (AMHPAC), the Confederation of Agricultural Associations of the State of Sinaloa (CAADES), the Agricultural Council of Baja California (CABC), the National Tomato Product System (SPTN) and the Association of Producers of Yaqui-Mayo Vegetables (APHYM) presented their arguments to strengthen their position as exporters to that country. 

Negotiation
"Our interest is to have a negotiation, like the one we had five years ago, that allows us to maintain the anti-dumping suspension agreement," stated Mario Robles, the director of the Vegetables Division of the CAADES.

This, he said, would prevent the Mexican agricultural sector from being affected, which would have a high social impact, especially for the more than 400 thousand jobs that are generated and the thousands of families that depend on this activity.

"However, we are aware that the US government has another vision and seeks to protect a few families dedicated to tomato production in the state of Florida," he stated.

 

Proposal being made
Regarding the advances in the negotiations of the tomato suspension agreement, representatives of the sector in Mexico said that, last week, they had made a proposal to their US counterparts where they caved in some aspects - however there seems to be no movement in the discussion.

"Last week we presented an improved proposal that basically covers all the proposals made by Florida producers to the Department of Commerce, except those that can not be negotiated because they are outside the law. This proposal that we presented is a viable proposal, as it offers unprecedented protection to the producers of that country. However, it was not taken into consideration by the Department of Commerce, which sent us the same proposal of October 2018 that we had already rejected," said Mario Robles, the director of the Center for Agricultural Associations of the State of Sinaloa and representative of the farmers in the negotiations.

Summer price
According to Robles, one of the aspects in which they caved in the proposal is the homologation of the tomato's summer price in all seasons, which is 15 to 20 percent lower than the winter price.

Despite the US agency's denial, some US organizations, such as the Florida Tomato Committee, have reported being satisfied with the proposal made a few days ago.

Compensatory payment zone
Mexicans are already in a compensatory payment zone, which means that they will have to pay 17.5 percent in tariffs when exporting tomato to the US.

This is because, once they reach an agreement, the US government establishes a 30-day deadline for US organizations and civil society to comment on the agreement reached. Since the agreement expires on May 7, even if the Mexicans reached an agreement tomorrow, they would have to pay the fee for a couple of days.

The most recent Mexican proposal includes the following:

  • Price increases ranging between 6 and 34 percent, including eliminating any differences between the summer and winter prices under the agreement, and establishing a higher price for specialty tomatoes grown organically.
  • Requirements that loads of Mexican tomatoes with more than 35 percent condition defects will have to be driven back to Mexico at the grower's expense.
  • Provisions making exports of Mexican tomatoes under a different signatory number other than one's own is a violation of the agreement.
  • No adjustments can be made under the reference price.
    Provisions to block unintended exports of fresh tomatoes from Mexico and better manage inventory levels in the United States.
  • Provisions to strengthen the ability of the Department of Agriculture to enforce the Tomato Suspension Agreement under the PACA by giving the Commerce Department all necessary grower documents to prove PACA violations.
  • New penalties for intentional violations of the agreement by Mexican growers or their selling agents.
  • Commitments by Mexican growers to help facilitate efforts by an interagency task force to enforce the agreement, including through on-site and video verifications, and a willingness to use independent auditors to help in that effort.

Focus on enforcement
"Our goal from the beginning of the renegotiation process has been to focus on enforcement even though there is no evidence of circumvention of the agreement," said Oscar Woltman, president of AMPHAC, the largest Mexican growers association.

"We have developed proposals on both sides of the border focusing on enforcing the arrival condition of the first sale, which is what is covered by the antidumping law. We can't, of course, agree to anything that goes beyond the reach of U.S. law," added Rosario Beltran of Confederación de Asociaciones Agrícolas del Estado de Sinaloa, A.C.

Added Salvatore Garcia, President of Consejo Agrícola de Baja California, A.C.: "We have said all along we prefer an agreement over litigation, but only if it is fair."

 


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