Mexico's Ferrari urges U.S. not to tear up tomato pact

WASHINGTON Mon Sep 24, 2012 5:15pm EDT

Mexico's Economic Secretary Bruno Ferrari speaks about ''The Competitive Environment in the Region'' at a Global Services Summit in Washington, July 20, 2011. REUTERS/Larry Downing

Mexico's Economic Secretary Bruno Ferrari speaks about ''The Competitive Environment in the Region'' at a Global Services Summit in Washington, July 20, 2011.

Credit: Reuters/Larry Downing

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WASHINGTON (Reuters) - The U.S. Commerce Department should renegotiate a 16-year-old tomato trade agreement with Mexico rather than give in to election-year demands from Florida growers to tear up the pact, Mexico's Economy Minister Bruno Ferrari said on Monday.

Under the agreement, Washington suspended anti-dumping action against Mexico in 1996 and negotiated a minimum price at which Mexican tomatoes can be sold in the United States.

Florida tomato 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.

"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 told Reuters in an interview.

Preserving the tomato agreement is important for Mexico, which currently exports close to $1.9 billion worth of tomatoes to the United States, 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.

If the United States makes a hasty decision, instead of conducting a standard 270-day review, "Mexico will use all our legal means to defend our producers," Ferrari said.

Florida is one of several "battleground" states expected to determine the outcome of the U.S. presidential election.

A number of Florida politicians up for re-election, including Senator Bill Nelson, Representative Debbie Wasserman Schultz and 15 other members of the state's congressional delegation, have sent letters pressing senior Commerce Department officials to quickly terminate the agreement.

HISTORIC COMPETITION

Florida is the second-largest U.S. producer of tomatoes behind California. U.S. production of both fresh and processing tomatoes totals about $2 billion annually.

Mexico accounts for about 71 percent of the U.S. import market for greenhouse tomatoes. Mexico and Florida historically compete for the U.S. winter and early spring market.

Ferrari said the Commerce Department should take Mexico growers up on their offer to renegotiate the pact.

This "would have the least impact on trade between the two countries and also on U.S. consumers," Ferrari said. "You have to keep in consideration that one of every two tomatoes that people consume here comes from Mexico."

Lawyers for the Mexican industry argue the department can't terminate the pact without first determining Florida growers have the support of at least 85 percent of the U.S. tomato industry and without conducting a 270-day review.

Since much of Mexico's produce is imported into the United States through Nogales, Arizona, a number of that state's politicians have weighed in on Mexico's side.

Senators John McCain and Jon Kyl and other Arizona lawmakers sent a letter last week to Acting U.S. Commerce Secretary Rebecca Blank stressing that "any rush to prematurely decide this issue before the November elections should be avoided."

The Florida group says it has the support of at least 90 percent of the U.S. industry based on official U.S. Agriculture Department production, but Ferrari said he doubts that claim.

"As a matter of fact, I don't believe they even have half of the support of the industry," Ferrari said. (Reporting by Doug Palmer; Editing by Andrew Hay, Phil Berlowitz and Bernard Orr)

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