Commentary: Rotten Tomatoes?

When countries go to war over trade, there are rarely winners. One domestic industry might get a reprieve from foreign competition as the home country slaps tariffs on cheaper imports, but another domestic industry is sure to suffer as the other country hits back with its own tariffs. In the end, consumers lose, because the result is dwindling competition that yields few choices and higher prices.

There’s a trade fight brewing between the U.S. and Mexico. It’s unnecessary, it’s avoidable, and the cross-border trade community stands to be caught in the middle when the punches start flying.

At issue are Florida-grown tomatoes, which face competition from fresh tomatoes imported from Mexico through such ports as Pharr, Texas, and Nogales, Ariz.

Farmers in the Sunshine State say Mexican producers are dumping tomatoes on the U.S. market and undercutting U.S. prices. Filing anti-dumping claims in the U.S. are long, drawn-out processes shrouded in a bureaucratic haze of red tape. Basically, the aggrieved party in the U.S. files its complaint with the Department of Commerce seeking remedy and compensation for what the claimant perceives to be unfair foreign competition. In cases where Commerce determines there has been legitimate harm to a domestic industry because of dumping, tariffs can be issued against the imported goods to offset the injury.

This is not such a case.

The United States and Mexico have had a bilateral agreement on tomato trade since 1996 and have renewed it twice, in 2002 and 2008. The agreement has worked well, bringing stability and predictability to this key segment of the produce market.

But in June, Florida farmers sent word to the Commerce Department that they want the deal torn up, setting the stage for another long battle over dumping.

But because the Florida growers haven’t availed themselves of any of the avenues for addressing perceived violations, it raises the specter of a complaint that has little to do with dumping or unfair competition and everything to do with a special-interest group looking to make some noise in a swing state during a presidential election year.

Perhaps one of the most dependable axioms in economics is that protectionism begets protectionism. We’re about to see it play out here, just as we’re putting another U.S.-Mexico tariff battle in our rearview mirror. You will recall U.S. agricultural exports — certain fruits, vegetables and nuts — got hit last year with retaliatory tariffs over the United States’ failure to open its borders to Mexican long-haul trucks.

Former U.S. Rep. Jim Kolbe, R-Ariz., one of our nation’s most respected trade voices, nailed it in a recent Wall Street Journal commentary, writing, “For its part, the Mexican government is not likely to sit idly by while the U.S. permits a special-interest group to cripple a Mexican industry that employs 350,000 workers.”

In other words, expect some tit for tat.

As the Border Trade Alliance wrote recently in a letter to Commerce, thousands of U.S. jobs involved in the importation, sale and distribution of Mexican fresh tomatoes are at risk because of the Florida farmers’ action. Those are jobs in border communities. The port of entry in Pharr is becoming a major entry point for Mexican produce because of a modernized highway infrastructure in Mexico facilitating those goods’ entrance into the central United States, while Nogales’ Mariposa port of entry is undergoing a remodel that will make it the border’s most modern commercial port of entry.

Border communities such as Nogales and Pharr and surrounding border communities could suffer if Mexican tomato imports are curtailed severely.

Mexican tomatoes are a highly desirable product. They look great and taste even better. The Obama administration should reject this claim by Florida farmers looking to simply edge out the competition that American consumers prefer.

Nelson Balido is president of the Border Trade Alliance. Contact him at nelson@thebta.org.
 

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