* U.S. move comes day before meeting with Mexico growers
* Mexico says seeks renegotiation of pact
* U.S. distributors want pact upheld
By Doug Palmer
WASHINGTON, Sept 27 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
Florida growers compete with Mexico for the U.S. winter and
early spring tomato market. They have pressed the Obama
administration since June to terminate the Mexico pact on
grounds it fails to protect them against Mexican tomatoes sold
in the United States below the cost of production.
The U.S. Commerce Department stopped short of immediately
tearing up the agreement but took a preliminary position in
favor of ending the pact. It said it would make a final decision
"as soon as practicable" and in no longer than 270 days.
The decision surprised Mexican officials and tomato
producers, who have offered to renegotiate the pact. They argue
the 1996 agreement has benefited U.S. consumers and brought
stability to the North American market.
An end to the agreement would clear the way for U.S. growers
to seek anti-dumping duties that could lead to higher prices for
Mexican tomatoes sold in the United States.
"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growers and the workers who have suffered under an outdated and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.
Mexican growers export about $1.9 billion worth of tomatoes
to the United States. They say Florida producers have failed to
keep pace with technology changes that have produced a tastier
Mexican tomato and propelled sales in the United States.
Many U.S. agricultural and business groups weighed in favor
of keeping the current pact out of fears the dispute could
spark a tomato trade war that would have collateral damage on
Francisco de Rosenzweig, a senior Mexican Economy Ministry
official, said Mexico's government was "very surprised" by the
decision, particularly as it came one day before a long-awaited
meeting between Mexican growers and the Commerce Department.
"It's very unfortunate that they issued a preliminary
decision against us first before sitting down with the Mexican
producers," de Rosenzweig told Reuters.
Martin Ley, a spokesman for Mexican producers, said they
would put forth a "strong proposal" in the Friday meeting with
U.S. officials, which they still hope will lay the foundation
for a new pact.
Mexico's Economy Minister Bruno Ferrari told Reuters earlier
this week it was "obvious" the Florida Tomato Exchange had timed
its request to put political pressure on the White House ahead
of the Nov. 6 presidential election, he said.
Florida is one of several battleground states expected to
determine the outcome of the Nov 6 election, where Obama is
running against Republican challenger Mitt Romney.
"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.
U.S. distributors of fresh produce sided with Mexico in the
dispute, calling the notice of intent to terminate the agreement
a "slap in the face" to the Mexicans and noting that thousands
of jobs in border states rely on the tomato importing business.
The Fresh Produce Association of America accused Washington
of acting hastily on political motives and said numerous U.S.
industry groups had lobbied to uphold the tomato agreement.
"Even Walmart, the biggest retailer in the world,
supported keeping the tomato suspension agreement," said Lance
Jungmeyer, president of the group said.