Mexico and the United States have made significant progress in resolving a dispute over bilateral tomato trade and could reach an agreement later this month. Tomato is the main agricultural product that Mexico exports to the United States.
The pact is known as a “suspension agreement” because in 1996 the US Department of Commerce suspended an anti-dumping investigation against Mexico and negotiated a minimum price at which Mexican tomatoes can be sold in that country. In 2011, shipments of tomatoes from Mexico to the United States amounted to 1,880 million dollars, according to official data, when in 1996 they were 580 million dollars. Since June, tomato growers in Florida have pressured the US administration to conclude the agreement with Mexico, arguing that it has failed to protect them from the sale of Mexican vegetables below the cost of production on US soil.
The flooding of the market with goods offered at a price lower than that of sale at the source, or at the cost of production at the destination – does not apply to perishables. First, a large part of Mexico’s tomatoes are produced for export – there is no domestic market to absorb such volume of production.
The cost of production and sale in the country of origin is irrelevant to the final price since it is set by the market in the country of destination, On the other hand, tomato is considered an undifferentiated good or commodity, but according to Mexican producers, consumers and other parties involved, Mexico’s export tomato is much higher than that produced in Florida, and here lies the root of the problem.
Floridians claim that since the signing of the Agreement in 1996, Mexico has tripled the value of tomatoes exported to the country, so their terms are no longer valid. The truth is that the tomato market has changed since the signing of NAFTA – increased production protected in both countries, reduction in the production area in the US, inflation, an increase in volume and import value of tomatoes from Mexico are some of the changes most dramatic in this industry.