Florida led tomato fight could hurt U.S.-Mexico trade
Florida led tomato fight could hurt U.S.-Mexico trade
By D. Rick Van Schoik
6 p.m., Jan. 3, 2013
The United States has benefited from very cordial trade relations with Mexico for over a decade and a half. Much of the relationship between the two NAFTA neighbors begins with the understanding that the U.S. is the No. 1 export market of Mexico and during some seasons we import more fresh produce from Mexico than all the rest of the world put together. We have the luxury of quality, tasty fruits and vegetables year-round at predictable and affordable prices.
Just as we enter a new year and pass one “cliff,” we are about to fall off the cliff of overall productive relations with Mexico over one product we import – with all the impetus coming from one state.
Tomatoes are such an important market for Mexico that the producers have invested in both the production and the supply chain to its customers to the north.
Florida farmers who have suffered the loss of citrus trees and other crops are trying to corner the market in tomatoes but are still using antiquated methods and valuable water to grow produce that they want to sell to the U.S. and Canadian markets. To make up for higher production costs, they try to shortcut by gassing the crop when green and by shipping them hard and tasteless.
Unfortunately, they can’t compete pricewise with the nearly six times more affordable tomatoes coming from the fair weather in Mexico, so they have claimed unfair subsidies and dumping by the Mexican government. Tomatoes are available year-round from Mexico, while Florida crops are susceptible to both tropical storms and winter freezes.
The Department of Commerce has looked into the issue twice in the past and concluded that indeed a completely level playing field exists with our NAFTA partner. Florida growers already have won minimum price guarantees on Mexican-grown tomatoes.
If Florida wins, Mexico can impart heavy tariffs in retribution, as it did when we denied their NAFTA trucks access to U.S. markets. And if they win, we pay higher prices on not just tomatoes but most everything we import, which is a bit of most everything, including energy.
Yes, cheaper wages in Mexico explain a small part of the difference, but a maturely sophisticated agriculture, supply chain and marketing successes mean that North America enjoys superb tomatoes from Mexico year-round.
Having recently sponsored a major conference on U.S.-Mexico trade, I can attest to how protectionism born in Florida can affect not only relations between U.S. and Mexico, but trade in general. The competitiveness of North America’s joint manufacturing and production worldwide is threatened, jeopardizing prosperity of all North Americans.
The last time the U.S. and Mexico had a trade dispute, it cost California and San Diego, respectively. That disagreement was over allowing Mexican trucks to enter and deliver into the U.S. interior as agreed under NAFTA. The Teamsters and other unions claimed safety and environmental differences between U.S. and Mexican trucks. Surveys were conducted that concluded Mexican trucks were safer exactly because they do undergo so many inspections, and protections are in place to assure Mexican trucks meet U.S. and California emissions standards.
As the largest exporter of agricultural products to Mexico, California suffered the largest retaliations under that trade dispute that totaled over $2 billion on nearly 100 products. San Diego consumers will also pay. The price, and dare I say the taste quality of tomatoes that we enjoy, will suffer not only if we get hit with tariffs but if we end up eating Florida tomatoes. San Diego is still a major tomato producer and as such has a dog in the fight, but even Texas producers acknowledge they “can do quite nicely importing Mexican tomatoes.”
I hope our Commerce Department and congressional influence urge fair trade and not protectionism borne in a state that does not understand the productivity issues involved with our trading relationship with Mexico.
If Florida gets its way, U.S. consumers will pay more, 350,000 Mexican producers and over 10,000 U.S. fresh-produce handlers will be out of a job and the U.S. will be launching a protectionist trade war. If Florida gets its way, the migration balance we currently have can be pushed toward more Mexicans seeking work here.
The Florida Chamber of Commerce needs to adopt a prosperous continental perspective over its own selfish interests. If a trade war erupts it will have few winners (Florida) and many losers – us, the U.S., Mexico and the world.
Instead of government-imposed protectionism, we should let the market determine people’s choices.
Van Schoik is director of Arizona State University’s North America Center for Transborder Studies.
http://www.utsandiego.com/news/2013/jan/03/tomato-fight-could-hurt-us-mexico-trade/
