Mexico and U.S. reach deal to end tomato tariff spat - minister

[August 21, 2019]   MEXICO CITY (Reuters) - Mexican tomato producers have reached a deal with the U.S. government to avoid an anti-dumping investigation, Mexican Economy Minister Graciela Marquez said on Wednesday, ending a testy tariff dispute that had rumbled on for months.

Mexico's Economy Minister Graciela Marquez attends a session with lawmakers and senators at the Senate building in Mexico City, Mexico June 14, 2019. REUTERS/Carlos Jasso

Under the deal, the vast majority of Mexican tomato exports will be subject to border inspections. Still, the accord provides a measure of relief to Mexican President Andres Manuel Lopez Obrador in his dealings with the Trump administration.

In May, the U.S. Commerce Department imposed a 17.5% tariff on Mexican tomatoes after the two sides failed to renew an earlier agreement that halted a U.S. anti-dumping probe. Since then, the two sides have held negotiations in search of a deal.

Calling the outcome of talks "good news" that kept the U.S. market open for tomato exporters, Marquez said on Twitter that the accord between the U.S. Commerce Department and Mexican producers had been reached shortly before midnight on Aug. 20.

A deal needed to be reached by Tuesday night to allow for a 30-day comment period before a Sept. 19 Commerce Department deadline for completing its anti-dumping investigation.

In a joint statement, several Mexican agricultural associations including the SPTN tomato producers group, said the accord included a "controversial proposal" to carry out border inspections on 92% of exports to for quality control purposes.

The deal also envisaged raising the reference price of specialty tomatoes, and an increase of 40% in the price of organic tomatoes above that of conventional ones, it said.

Earlier this month, the Mexican government had rejected as "totally unacceptable" a proposal to subject all tomato exports from Mexico to border inspections.

Relations between president Lopez Obrador and his U.S. counterpart Donald Trump have been strained over trade and immigration. However, the origins of the tomato spat predate the New York real estate magnate's time in the White House.

The current tomato agreement face its next so-called "sunset review" by September 2024, the statement added.

According to the Mexican government, there are some 1.5 million tomato growers in Mexico, and exports of the product to the United States are worth around $2 billion annually.

(Reporting by Dave Graham and Sharay Angulo; Editing by Toby Chopra)

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