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US-Mexican tomato war comes to an end

The US and Mexico have reached an agreement on the Mexican tomato export. Mexican Economy Minister Graciela Marquez says that the renewal of the agreement will suspend the anti-dumping investigation that has been going on. "This is good news since it will keep the US market open for our tomatoes." 

It was an important day for both countries yesterday since the deadline on the agreement was expiring at midnight. Just before this the parties reached an agreement. Now a 30-day period will start and after that the deal will be signed, removing the import tariff from the Mexican produce. The deal will again last for 5 years. 

The agreement includes the proposal to inspect 92 percent of the trucks at the border to check their quality, an increase in the reference prices for specialty tomatoes and an increase in the price of organic tomatoes to get those 40 percent above the price of conventional ones.

What was going on?
The Tomato Suspension Agreement agreement sets different floor prices for Mexican fresh tomatoes during the summer and winter and also specifies prices for open field/adapted-environment and controlled environment production. 

The origins for the agreements date back to 1996, when the U.S. Department of Commerce initiated an anti-dumping investigation to determine whether imports of fresh tomatoes were sold at less than their fair value in the US. After confirming this preliminarily, eventually a suspension agreement was made up, including a minimum price for Mexican imports. The reference price is to be renewed every five years. All fresh or chilled tomatoes from Mexico are covered by price floors.

Withdraw
This past February, the Department of Commerce announced their intent to withdraw from the 2013 Suspension Agreement on Fresh Tomatoes from Mexico, rescinding the five-year sunset review of the suspended investigation and the administrative review of the 2013 Agreement, and to resume the anti-dumping duty investigation initiated in 1996.

Since May, 90 days after the initial termination announcement, the United States imposed the 17.5 percent tariff on Mexican tomato imports.

During summer the US Commerce Department announced a 25.28 per cent dumping margin, that was supposed to start in September. Thanks to the new agreement both the current tarriff as well as the anti dumping raise are off the table. 

 

 


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