The U.S. finalized a deal with Mexican tomato growers and instated the new Tomato Suspension Agreement. The reactions to this agreement have been very mixed. American retailers and importers warn that it lead to more expensive and lower-quality tomatoes at the supermarket. The agreement will ensure continued market access for Mexican tomatoes but it comes at a cost to importers, who will face costs and disruption to business due to the controversial Border Inspection Mechanism. That is why some see the agreement as a technical barrier to trade.
“It is outrageous that Commerce used false justifications to introduce what essentially acts as a quota or volume control method,” said Lance Jungmeyer, President of the Fresh Produce Association of the Americas (FPAA), adding, “It is completely unnecessary to require USDA to conduct quality inspections on an item that has already demonstrated a historical pass rate of 99.76%.” The inspections are for round and Roma tomatoes and bulk grape tomatoes.
The Commerce Department said the inspections "prevent the importation of low-quality, poor-condition tomatoes from Mexico, which can have price-suppressive effects on the market."
Retailers are worried the inspections in the new deal will lead to bottlenecks at the border. "Any delay in inspections would lead to quality degradation and added cost," wrote James R. Bailey, senior director for federal government affairs at Walmart Inc., in a September letter to the Commerce Department. "Given the high quality and low failure rate of Mexican tomatoes, such intensive inspections do not seem proportionate to the risk."
The Mexican grower association CAADES seemed more pleased with the results. President Rosario Beltran stated: “"These provisions help relieve our concerns that the United States was setting up a de facto quota or volume restriction. We hope these provisions will give comfort to the many interests in both countries concerned about bottlenecks at the border and supply chain delays."
AMHPAC, representing the tomato growers organizations, issued a statement that said: "we are pleased to report that today, September 19, after meeting again with the Department of Commerce, we have finally completed the negotiation process that we started in February 2018 with the signing of a new Suspension Agreement. With this new Agreement, which will be reviewed in a mandatory manner in 2024, the investigation reactivated on May 7, 2019, is suspended; cash deposits that we have been making since that date are suspended and all exporters will be entitled to receive their refunds once Commerce turns its instructions to the CBP." Once this Agreement is signed, all exports must be made with the new reference prices that will be announced by each of its organizations.
Antonio Gandara, President of the Sonora Growers Association said: “We take the Department of Commerce at its word that the agreement is not designed to impede trade and we thank the Department's team for working with us to make important changes to the agreement in the last 30 days.”
It is estimated that constructing new warehouse space for inspections will cost importers more than $200 million upfront, plus another $50 million a year in fees and other costs. While the new agreement states that USDA will conduct and complete the inspection “normally within 24 hours,” the new agreement does not provide a waiver in case the inspection cannot be done.
Vine-ripened tomatoes are sensitive perishable items that continue to ripen after harvest, and typically must be delivered to customers within seven days after harvest. Adding a day or two for inspection at the border reduces shelf life.
“USDA has assured us the inspections can be done within 24 hours. If that’s really the case, then there should be no problem including language for a waiver in the instance the deadline can’t be met,” Jungmeyer said.
FPAA is pleased that the Mexican growers were able to secure some changes in the agreement that make the agreement more palatable, such as clarifying certain technical definitions. "The agreement was hard fought, but we were able to secure a number of important provisions that will make this deal work for our distributors and customers," said Mario Robles, Director of the Sinaloa growers association.
“Importers of other items that legitimately require inspection, such as avocados, citrus and table grapes, now could face economic damage due to slowdowns in getting inspections, considering the massive amount of new inspections that must occur. Food is a just-in-time business,” Jungmeyer said. “All around, this is a total step backward.”
The Florida Tomato Exchange welcomed the deal, saying it "includes strong monitoring, enforcement and anti-circumvention provisions, including border inspections, that should help eliminate the injury to American tomato farmers caused by dumped Mexican tomatoes."
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