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End of US / Mexico Tomato Agreement Triggers 17.5% Tariff

May 8, 2019

The Department of Commerce terminated the 2013 Suspension Agreement on Fresh Tomatoes from Mexico, and that negotiations will continue regarding a possible revised agreement acceptable to the Mexican signatories which also addresses the concerns of the U.S. industry to the extent permissible by U.S. trade law. During the negotiations, Commerce will continue with the investigation and instruct Customs and Border Protection (CBP) to collect cash deposits or bonds based on the preliminary determination by Commerce, which was issued in 1996.

As a result a 17.5% tariff on Mexican tomatoes took effect Tuesday.

Any deposits collected will be refunded if a revised agreement is reached, or the U.S. International Trade Commission (ITC) determines there is no injury based on its own independent investigation.

“The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” said Secretary of Commerce Wilbur Ross. “We remain optimistic that there will be a negotiated solution.”

On November 14, 2018, representatives of the domestic tomato industry requested that the Department of Commerce terminate the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. On February 6, 2019, the Department notified the Mexican signatories that Commerce intends to withdraw from the Agreement, consistent with Section VI.B. which states, “{t}he signatories or the Department may withdraw from this Agreement upon ninety days written notice to the other party.” Today, 90 days after Commerce notified the Mexican signatories, the Department is withdrawing from the Agreement. As a consequence of withdrawal, the Agreement terminates today.

Termination of the Agreement will result in the continuation of the suspended investigation. Commerce will continue with its investigation and notify the ITC of its final determination. If Commerce continues to find sales made at less than fair value in its final determination, the ITC will then complete its own investigation and make a final determination with respect to injury. If both Commerce and the ITC issue affirmative final determinations, an antidumping duty order will be issued.

Commerce opened negotiations with the Mexican signatories in January 2018 and is continuing the discussion to reach an agreement that is satisfactory to both Mexican growers and producers, as well as U.S. industry. Should an agreement be reached, Commerce and the Mexican signatories could enter into a new agreement, subject to the 30-day notification period as outlined in the statute.

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