What is in this article?:
- US growers want tomato deal with Mexico terminated
- Congress enters fray
- U.S. growers argue they cannot compete at revised floor prices for Mexican tomatoes and want the deal terminated, not renegotiated.
Congress enters fray
Congress has already entered the dispute. Fifteen members of the House of Representatives from Florida, 10 Republicans and 5 Democrats, wrote to Acting Commerce Secretary Rebecca Blank indicating disappointment on the ‘changed circumstances’ review rather than terminating the suspension agreement giving producers the option to file a new anti-dumping investigation. Senator Ben Nelson (FL-D) voiced similar support for quick resolution of the ‘changed circumstances’ review.
That politics would enter a trade dispute in a Presidential election year is not a surprise. Both political parties slice the electorate into political interest subgroups and appeal to their specific needs. That tomato growers, input suppliers and farm workers, would be one of those subgroups seems logical. Representatives from both parties signing a letter of support is a normal response to a local political constituency. A Senator running for reelection is expected to chime in.
The role of the President should be different. He is called upon to represent the broader interests of all consumers and exporters of other goods and services. The goal of the Florida tomato growers is to protect their business interests. Achieving that requires taxing the competition and that requires calculations to show that Mexican tomatoes are not priced high enough. A U.S. President should not be part of that to the disadvantage of all U.S. consumers and other exporters.
Almost 17 years after NAFTA was implemented and five years after the last transition periods has ended, the U.S. and Mexico need a better way to settle these disputes than filing anti-dumping cases. Mexican chicken meat and pork producers continue to bring cases against U.S. producers just like the U.S. tomato producers. Having a competitive advantage should not result in a trade dispute case. President Obama and Mitt Romney should commit to not using anti-dumping cases as should President-elect Nieto of Mexico.
An investment climate should be created where decisions can be made with a long-term view knowing that producing a quality product at a competitive price will be rewarded. Mexican producers have invested in new technology and claim their vine-ripened tomatoes are superior products. Their market share in the U.S. winter fresh market has increased from about one-third to one-half over the last 16 years.
The three NAFTA countries will never reach their full potential of investment opportunities for producers and savings from lower prices for consumers until political influence in importing and exporting is further reduced. Politicians will continue to intervene as long as political rewards are available.
Ross Korves is an Economic Policy Analyst with Truth About Trade and Technology.