U.S. answers Florida cry to end tomato pact with Mexico

Reuters News
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Posted: Sep 27, 2012 12:32 PM
U.S. answers Florida cry to end tomato pact with Mexico

By Doug Palmer

WASHINGTON (Reuters) - President Barack Obama's administration took a big step on Thursday toward terminating a 16-year-old tomato trade agreement with Mexico following a request from growers in Florida, an important swing state in the presidential election.

"Today's preliminary decision is welcome news to domestic growers and the workers who have suffered under an outdated and failed agreement governing trade in fresh tomatoes with Mexico," Reggie Brown, executive director of the Florida Tomato Exchange, said in a statement.

But Martin Ley, a spokesman for Mexican tomato growers, told Reuters they were "stunned and disappointed" by the decision and would continue to press the United States to renegotiate the agreement, rather than terminating it.

Preserving the tomato agreement is important for Mexico, which currently exports close to $1.9 billion worth of tomatoes to the United States, Mexico's Economy Minister Bruno Ferrari said in an interview earlier this week.

"We believe the suspension agreement has worked well for 16 years. It has been good for the industries and for U.S. consumers as well," Ferrari said.

It is "obvious" the Florida Tomato Exchange timed its request to put political pressure on the White House ahead of the November 6 presidential election, he said.

The U.S. Commerce Department stopped short of immediately tearing up the agreement, as Florida growers requested in June.

But it took a preliminary position in favor of ending the pact and said it would make a final decision "as soon as practicable" and in no longer than 270 days.

"While we would have preferred that today's announcement would have ended the fight, the preliminary decision ratifying the domestic industry's position will help reverse the downward spiral the industry has been facing," Brown said.

The existing pact is called a "suspension agreement" because the Commerce Department suspended an anti-dumping investigation against Mexico in 1996 and negotiated a minimum price at which Mexican tomatoes can be sold in the United States.

Florida growers complain the agreement fails to protect them against Mexican tomatoes sold below the cost of production. Ditching the agreement would allow Florida producers to file a new anti-dumping complaint. That alarms Mexican growers, who prefer the stability of the pact.

Mexico and Florida historically compete for the U.S. winter and early spring market.

(Reporting By Doug Palmer; Editing by Chizu Nomiyama and Andrew Hay)