Hot Tomatoes

Mexico's vegetables and oil

Just when Washington is trying to cultivate warmer relations with oil-rich Mexico, a decade-old trade row over winter vegetables threatens to erupt again. Responding to complaints from some Florida growers, the Treasury Department has begun investigating whether Mexican exports of tomatoes, eggplant, bell peppers, squash and cucumbers have been "dumped" in the U.S.--that is, sold at prices below their cost of production. Should the Mexicans be found guilty of violating the antidumping law they would have to pay duties on their produce to cover the margin of dumping. The issue is hot. As a State Department specialist puts it: "We have much bigger interests at stake in this matter than merely tomatoes."

Sales of winter vegetables bring about $250 million annually to Florida farmers, but they complain that their profits are pinched by competition from the Mexicans, who sold $250 million worth of vegetables in the U.S. last year. Mexican tomatoes alone account for almost 50% of all winter tomatoes sold in the U.S. The Florida growers claim their Mexican rivals produce too much and then are forced to dump in the U.S. before the vegetables perish. The Mexicans counter that the Floridians are trying to protect their higher-cost industry.

Treasury is expected to issue a preliminary finding by mid-July. State Department policymakers worry that action penalizing Mexican exporters would be a classic case of myopic policy. White House Inflation Fighter Alfred Kahn reckons that the lack of low-cost Mexican produce could add .5% to food prices. Two powerful Floridians on the House Ways and Means Committee, Democrat Sam Gibbons and Republican L.A. Bafalis, have blocked one measure that would have exempted produce from antidumping laws. Now it is up to Treasury to see if the case can be settled so that the U.S. will not find it has bruised relations with Mexico for the sake of a relatively small number of growers.

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