Feb. 3 (Bloomberg) -- The U.S. Commerce Department and tomato growers from Mexico agreed to revive a 17-year-old pact governing prices for the goods, potentially averting a trade war between the two nations.
The agency and Mexican producers yesterday signed a draft agreement to prevent imports of fresh or chilled tomatoes from Mexico from being sold in the U.S. below production costs. The Commerce Department in September issued a preliminary decision to end the pricing accord, in place in various versions since 1996, after a complaint from U.S. tomato growers.
The agreement “restores stability and confidence to the U.S. tomato market and meets the requirements of U.S. law,” Francisco Sanchez, the Commerce Department’s undersecretary for international trade, said in a statement.
U.S. tomato producers led by the Florida industry have said the trade accord, which sets a minimum price for U.S. tomato imports from Mexico, is outdated and easily circumvented. U.S. importers of the products wanted to keep the pact in place, saying that removing it would eventually cause domestic prices to rise. Mexican officials have said their government would consider retaliatory action if the agreement were terminated.
The proposal announced yesterday raises reference prices for the imports, covers more goods and strengthens enforcement measures, according to a Commerce Department fact sheet.
Preserving the agreement “is critical to the interests of U.S. consumers, as well as workers and businesses on both sides of the border,” Martin Ley, a representative of a consortium of Mexican tomato growers, said in a statement.
Edward Beckman, president of Certified Greenhouse Farmers, a Fresno, California-based trade association, said in a statement that “much work remains to have the agreement fully and faithfully implemented and continuous monitoring and enforcement will be critical.”
Public comments on the draft agreement are due by Feb. 11, the Commerce Department said. The agency expects a final agreement to be in place by March 4.
The U.S. imported $1.8 billion worth of fresh or chilled tomatoes from Mexico in 2011, a 58 percent increase from 2008, according to the Census Bureau.
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