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Trade agreement spat could cause Arizona shoppers to see higher produce prices

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Craig Ruiz-Chamber Business News article provided by AZ Big Media

Trade agreement spat could cause Arizona shoppers to see higher produce prices

The International Trade Administration is taking comments from the public in response to a Florida group’s call to end the agreement that has governed the importation of fresh tomatoes from Mexico since 2019. Should the Biden administration elect to rescind the deal, it could have a significant impact on Arizona produce prices, where the fresh produce trade is a major job creator, and on shoppers who are watching their grocery bills closely during this period of high inflation. 

LEARN MORE: Here’s how Phoenix inflation compares with rest of U.S.

The agreement, called the Tomato Suspension Agreement, is the latest in a series of such accords adopted in five-year increments since 1996. 

The Florida Tomato Exchange, which represents the interests of Florida growers, has taken a protectionist position, claiming that fresh tomatoes are being “dumped” on the United States market, unfairly edging out Florida-grown tomatoes by being sold below the floor price that was agreed to in the 2019 deal. 

On the other side are groups representing importers, including the Fresh Produce Association of the Americas in Nogales, Arizona. 

“The recent request by the Florida Tomato Exchange (FTE) asking the Department of Commerce to withdraw from the 2019 Tomato Suspension Agreement jeopardizes the availability of the variety of tomatoes that U.S. consumers expect at prices they can afford and would harm U.S. businesses,” FPAA President Lance Jungmeyer said in a statement. “Through these actions, the FTE continues to attempt to use antidumping laws for the unintended purpose of creating a monopoly for themselves in the marketplace and covering for their unwillingness or inability to innovate and adapt to changing market demands.” 

The termination of the agreement could disrupt the flow of tomatoes and other produce, leading to potential shortages and supply chain disruptions. The potential scarcity of tomatoes would mean higher Arizona produce prices at a time of already high inflation. 

When the latest agreement was still under negotiation, members of the Arizona congressional delegation wrote to the Trump administration to stress the state’s trade relationship with Mexico as a vital economic driver that contributes billions of dollars to the U.S. GDP and supports around 33,000 American jobs. 

The termination of the agreement could also carry the risk of retaliation from Mexico in the form of tariffs on U.S. exports, making U.S.-made products more expensive and less competitive south of the border. 

The FPAA points out that, despite the claims from the Florida growers, the 2019 agreement has been robustly enforced. 

“This includes regular quarterly audits, administrative reviews, on-site audits from the U.S. Department of Commerce, and enforcement measures in place in Mexico,” says the FPAA. “Contrary to FTE’s false claims, the Department of Commerce has consistently found Mexican tomatoes have complied fully with the Tomato Suspension Agreement.” 

Great-tasting, vine-ripened fresh tomatoes from Mexico are popular with U.S. shoppers, says Jungmeyer. Meanwhile, Florida tomatoes are picked green from the field and ripened artificially with ethylene gas. 

“The allegations by the Florida growers are as timeworn and tired as their gassed green tomatoes,” Jungmeyer said. “Consumers overwhelmingly prefer the flavor of vine ripened tomatoes over gassed green tomatoes like those from Florida.  Mexico is a major supplier of vine ripened tomatoes which is one reason why the FTE wants to erect a trade barrier. There really is no substitute for a vine ripened tomato, and to put in duties would simply amount to another tax that shoppers just can’t afford.” 

The economic activity derived from the importation of tomatoes is estimated to account for $3 billion in gross domestic product. 

Responses to the administration’s call for comments are due September 8.