World At A Glance - Let's Not Call The Whole Thing Off: Tomato Deal Reached

[HuffingtonPost]

(Adds reaction, more detail on pact)                

* Deal raises minimum "reference" price for Mexican tomatoes                

* Agreement expected to take effect on March 4                

By Doug Palmer                

WASHINGTON, Feb 2 (Reuters) - The U.S. government and  Mexican tomato growers reached a tentative agreement on Saturday  that reduces the threat of a costly trade war stemming from a  U.S. decision last year to pull out of a 1996 bilateral tomato  trade pact.                

"I am pleased that we were able to come to an agreement on  fresh tomato imports from Mexico that restores stability and  confidence to the U.S. tomato market and meets the requirements  of U.S. law,"€� U.S. Commerce Under Secretary for International  Trade Francisco Sanchez said in a statement.                

The draft agreement substantially raises the minimum  "reference" price at which Mexican plum, cherry and other  tomatoes can be sold in the United States and accounts for  changes that have occurred in the tomato market since the  original agreement, Sanchez said.                

For some Mexican tomatoes, the new reference price is more  than double the current such price, Sanchez said. The deal is  expected to take effect on March 4, after a public comment  period, he said.                

Mexican Economy Minister Ildefonso Guajardo said the deal  guaranteed Mexican farmers access to the U.S. market under  conditions that were "fair and competitive."                

"We worked hand in hand with Mexican producers on this  agreement to avoid damage to the sector," he said.                

The U.S. Commerce Department made a preliminary decision in  September to terminate the 1996 tomato agreement after Florida  growers complained that the arrangement no longer protected them  against Mexican tomatoes sold below the cost of production.                

That angered Mexican growers, who argued the pact had  benefited U.S. consumers and brought stability to the North  American market.                

Mexican officials said the U.S. move appeared designed to  help President Barack Obama carry Florida in his election battle  against Republican Mitt Romney. Obama won the state in the  November contest.                

Mexico exports about $1.9 billion worth of tomatoes to the  United States each year. Varieties include common round, cherry,  grape, plum, greenhouse and pear tomatoes. The industry says  Florida producers have not kept pace with new growing techniques  that produce tastier tomatoes and have propelled Mexican sales.                                

FOUR CATEGORIES                

The proposed agreement spares Mexican growers from having to  wage a costly legal battle against a new anti-dumping case  brought by Florida producers.                

It also averts the possibility of a broader trade war. U.S.  business groups such as the U.S. Chamber of Commerce feared  Mexico could retaliate if the United States slapped hefty duties  on Mexican tomatoes.                

Reggie Brown, executive vice president of the Florida Tomato  Exchange, stopped short of endorsing the agreement but said it  vindicated the U.S. industry's position that Mexican growers  were "dumping" their tomatoes in the United States.                

"Mexican growers and their government have tried to protect  their interests with tremendous pressure on our government,  threats to U.S. producers and a well-funded lobbying and media  campaign," Brown said.                

"The facts, however, were clear and could not be disputed.  Mexican tomatoes were being sold in the U.S. market in rapidly  increasing volumes at prices that did not reflect the cost of  production," he said.                

The new pact sets reference prices for four categories of  tomatoes, instead of just one under the current pact. It also  broadens coverage to include essentially all Mexican growers and  exporters, the Commerce Department said.                

The four categories, from least to most expensive, are "open  field and adapted environment" tomatoes, "controlled  environment" tomatoes, "specialty loose" tomatoes and "specialty  packed" tomatoes.                

The agreement sets winter and summer references prices for  each category. The winter prices range from 31 cents per pound  for open field and adapted environment tomatoes to 59 cents for  specialty packed. The summer prices range from 24.6 cents to  46.8 cents per pound.                

The single reference price for all Mexican tomatoes under  the current agreement is 21.6 cents per pound in the winter and  17.2 cents in the summer.     (Reporting by Doug Palmer; Additional reporting by Dave Graham  in Mexico City; Editing by Eric Beech)

Via: HuffingtonPost