US, Mexico reach tomato deal to avert trade war

Reuters/Washington

The US government and Mexican tomato growers have reached a tentative agreement that reduces the threat of a costly trade war stemming from a US decision last year to pull out of a 1996 bilateral tomato trade pact.

“I am pleased that we were able to come to an agreement on fresh tomato imports from Mexico that restores stability and confidence to the US tomato market and meets the requirements of US law,” US commerce under-secretary for international trade, Francisco Sanchez, said.

The draft agreement substantially raises the minimum “reference” price at which Mexican plum, cherry and other tomatoes can be sold in the US and accounts for changes that have occurred in the tomato market since the original agreement, Sanchez said.

For some Mexican tomatoes, the new reference price is more than double the current such price, Sanchez said.

The deal is expected to take effect on March 4, after a public comment period, he said.

Mexican Economy Minister Ildefonso Guajardo said the deal guaranteed Mexican farmers access to the US market under conditions that were “fair and competitive.” “We worked hand in hand with Mexican producers on this agreement to avoid damage to the sector,” he said.

The US commerce department made a preliminary decision in September to terminate the 1996 tomato agreement after Florida growers complained that the arrangement no longer protected them against Mexican tomatoes sold below the cost of production.

That angered Mexican growers, who argued the pact had benefited US consumers and brought stability to the North American market.

Mexican officials said the US move appeared designed to help President Barack Obama carry Florida in his election battle against Republican Mitt Romney.