On October 8, Mexico is set to become a full partner in the Trans-Pacific Partnership (TPP) negotiations. As Mexican Ambassador to the United States Arturo Sarukhan is fond of saying, with TPP Mexico and the U.S. are playing chess, not checkers. Indeed, Mexico’s participation in the high-standards pact represents a unique opportunity to consolidate our strategic bilateral partnership and deepen our economic integration in the context of like-minded countries along the Pacific Rim.
Yet even as we celebrate cooperation at the level of geopolitics and multilateral negotiations, we cannot ignore the more prosaic frictions that inevitably arise in such a broad and dynamic relationship. Recently, these have included spats over chickens and washing machines, while the latest issue revolves around tomatoes.
Tomato disputes have a long history. With the advantages of ideal soil and climate conditions and low labor costs, Mexico became a major player in the U.S. market following the embargo placed on Cuba in 1962. After decades of tomato trade wars, the signing of the North American Free Trade Agreement (NAFTA) in 1992 eliminated tariffs on Mexican tomatoes over a ten-year transition period, despite the opposition of Florida agricultural producers. In 1996, at the behest of Florida’s tomato industry, the U.S. Commerce Department initiated an anti-dumping investigation to determine whether tomato imports from Mexico were being sold at less than fair market value. To suspend the investigation, Mexican producers agreed to a minimum price for imports. This so-called “suspension agreement” has been honored for 16 years, with two renewals as well as adjustments of the reference price.
Fast forward to the electoral year of 2012, and Florida tomato growers have requested that the Commerce Department end the suspension agreement so they can initiate a new anti-dumping investigation against Mexican tomatoes. They argue that the agreement is outdated and fails to protect them against the Mexican competition; their critics accuse them of a transparent attempt to use a swing state’s political clout on behalf of protectionist interests.
The Mexican government is taking the threat to Mexico’s principal agricultural export very seriously. According to data from the Mexican Embassy in Washington DC, the tomato sector provides more than 350,000 jobs in Mexico, while exporting $2.1 billion worth of tomatoes last year, 93 percent of which were shipped to the U.S.
A growing number of U.S. businesses and congressional representatives have written to Acting Commerce Secretary Rebecca Blank in support of the suspension agreement. In an op-ed in the Wall Street Journal, former Congressman Jim Kolbe warned that a termination of the agreement would “come at the cost of far higher prices for American consumers, the loss of U.S. jobs, and possibly a trade war” with our second-largest export market. Indeed, produce trade with Mexico employs tens of thousands of U.S. workers in companies involved in distributing, transporting, and selling tomatoes and other fresh vegetables.
The suspension agreement has successfully struck a balance between the interests of U.S. tomato growers and the broader U.S. public interest for 16 years. It also includes mechanisms for addressing concerns without igniting a trade war. As our TPP partners welcome Mexico to the negotiating table, the Commerce Department should reject the Florida tomato growers’ request, which represents a dangerous distraction from the chess game at hand.
Kezia McKeague is a contributing blogger to AQ Online. She is director of government relations at the Council of the Americas in Washington DC.
