Border Trade Alliance and bipartisan congressional coalition continue to oppose decision by Department of Commerce to exit 2013 agreement on tomato trade with Mexico
WASHINGTON (April 25, 2019)—A new study assessing the impact of the potential imposition of duties on imported fresh tomatoes from Mexico paints a bleak picture for U.S. consumers, who would be faced with dramatic price increases ranging from 40-85%. [LINK to research memo.]
The Department of Commerce is preparing to withdraw the U.S. from the 2013 Tomato Suspension Agreement, which governs U.S.-Mexico tomato trade. A withdrawal from the agreement would reopen an antidumping case against Mexico, which could lead to duties that would be passed along to consumers in the form of much higher prices on popular varieties of tomatoes, as well as a corresponding drop in the volume of tomato imports.
A small but vocal band of agricultural interests in Florida and Georgia has been urging Commerce to reopen the case in order to give tomatoes grown in their states the upper hand in the U.S. market, despite consumers’ preference for the Mexican greenhouse-grown, vine-ripened varieties that are less susceptible to pest and weather damage. Tomatoes from the Southeast are picked green from the field and ripened artificially with ethylene gas.
Researchers at Arizona State University determined that prices for imported Mexican fresh tomatoes would skyrocket as much as 85% if the effort to curb imports were successful, adjusting for tomato variety and time of year.
“U.S. consumers pay for the lion’s share of the tariff impact because the demand for tomatoes in the U.S. is relatively inelastic, meaning that consumers do not change how much they purchase in response to higher prices,” according to Dr. Timothy Richards, the Morrison Chair of Agribusiness at ASU, who prepared the study.
The Border Trade Alliance, a public-private coalition of trade supporters that has been a leading opponent of the Commerce decision to exit the 2013 agreement, said the study confirms its concerns that consumers would foot the bill for Florida and Georgia’s attempts to tilt the agricultural trade playing field.
“This study confirms that withdrawing from the Tomato Suspension Agreement will mean fewer imports and higher prices. U.S. shoppers will be paying the price,” BTA President Ms. Britton Clarke said. “On the other hand, we could preserve the current system of trade that has resulted in the availability of a wide variety of fresh tomatoes in produce sections year-round at prices hardworking American families can afford. What’s not to like? We’ll continue to urge the administration to reject the calls for protectionism from certain regional interests and instead to stand up for U.S. consumers.”
Trade advocates from both parties on Capitol Hill have been clear in their support for U.S.-Mexico tariff-free tomato trade.
U.S. Sen. Martha McSally (R-Ariz.):
“Arizona benefits from cross border commerce of fruits and vegetables, including tomatoes. It creates Arizona jobs and positive economic impact to our communities, as well as affordable fruits and vegetables at the grocery store. I oppose the administration’s move to terminate the Tomato Suspension Agreement and have made that clear to the Secretary of Commerce and his team. This study by ASU confirms the negative impact of this decision. I will ensure that Secretary Ross has a copy of the study immediately and will continue to fight for a swift new agreement that protects Arizona jobs and hardworking families.”
U.S. Sen. Kyrsten Sinema (D-Ariz.):
“The Tomato Suspension Agreement is a critical piece of the U.S.-Mexico trade relationship that generates billions of dollars for our economy. The agreement’s termination will hurt Arizona’s economy and I will keep working with my colleagues to find a solution.”
U.S. Rep. Henry Cuellar (D-Texas):
“In a letter earlier this year to Commerce Secretary Wilbur Ross, I urged him to not withdraw the U.S. from the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. Withdrawing from the agreement is a step in the wrong direction for our economy and for every American consumer. Instituting tariffs on fruits and vegetables puts our trade relationship with Mexico at risk and have a direct impact in our economy. Ultimately, U.S. consumers pay for the lion’s share of the tariff impact because the demand for tomatoes does not change how much we purchase in response to higher prices. The U.S. is Mexico’s top agricultural trade partner, exporting $18 billion worth of U.S. produce into Mexico – about 70% of Mexico’s agri-food imports. I will continue to work for U.S. consumers to ensure we have access to affordable and fresh produce, and improve our trade relationship with Mexico which directly impacts our economy and creates and sustains American jobs.”
U.S. Rep. Vicente Gonzalez (D-Texas):
“I am proud to represent the Pharr International Bridge, which crosses 60 percent of the produce traveling northbound into the United States. In 2018, tomatoes were the Bridge’s top commodity, in large part due to the certainty provided by the Tomato Suspension Agreement. We know that terminating this agreement would harm consumers and industry alike and have cautioned U.S. Secretary of Commerce Wilbur Ross against abandoning it. This new study predicts a scenario that those of us in Texas – and across this country – cannot afford and reinforces the importance of renegotiating this critical agreement.”
U.S. Rep. Raul Grijalva (D-Ariz.):
“Terminating the Tomato Suspension Agreement would be an economic disaster that would cost our economy billions of dollars and imperil countless Arizona jobs. This agreement must be renegotiated—not terminated—for the sake of consumers and industry in Arizona and beyond. I will continue fighting for sound economic policies that protect our important trade relationship with Mexico.”
Since 1986, the BTA has served as a grassroots, non-profit organization that provides a forum for discussion and advocacy on issues pertaining to border development and quality of life and trade in the Americas. A network of public and private sector representatives from the United States, Mexico and Canada, BTA’s core values include a commitment to improving the quality of life of border communities through trade and commerce. The BTA is online at thebta.org and @borderalliance.
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