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Obama's Tomato War Against Mexico: Policy or Politics?

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The Commerce Department has sided with US farmers from the key swing state of Florida in a trade dispute against Mexican tomato producers.

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Lance Jungmeyer, president of the Nogales, Arizona-based Fresh Produce Association of the Americas, which promotes Mexican goods exported to the US, agreed with Alday, telling The Produce News, "The Mexican grower groups had tried in vain for four months to schedule a face-to-face opportunity to renegotiate this agreement. The fact that Commerce chose to terminate the agreement the day before this meeting only underscores the political pressure that Commerce was facing from the industry in Florida, a key swing state in the upcoming election."

Is President Obama siding with Floridian tomato producers in a bid to win votes in a swing state? The Wall Street Journal certainly thinks so, saying in an editorial that "the timing and truncated process suggest a political motive," and that "the world can see that a US President is using trade law as a domestic political weapon, and America's reputation for trade leadership takes another blow."

Though the review process typically takes up to nine months, the Florida tomato lobby is now urging Commerce to make a final decision before the elections. They argue that farmers need an early verdict to make seed planting decisions for the next season.

Several US business giants -- including Wal-Mart (NYSE:WMT), the US Chamber of Commerce, and the US National Restaurant Association -- have thrown their weight behind the Mexicans in this fight, arguing that abolishing the agreement would launch a trade war that would hurt the economy and cost job losses.

"Termination of the tomatoes agreement will benefit no one and will lead only to uncertainty and unpredictability in the market," wrote Wal-Mart, which is worried that it would have to increase its tomato prices, in a letter to the Commerce Department.

Democratic Arizona congressman Raul M Grijalva also penned a letter to Commerce, saying, "The $100 billion US produce market is now globally integrated, and up to $7 billion of the industry is comprised of fruits and vegetables from Mexico, affecting tens of thousands of US workers. Ending this agreement will put people out of work, reduce the variety and quality of tomatoes available to consumers, and hurt all Americans by raising prices at the supermarket check-out line."

US business organizations in support of continuing the pact with Mexico have even launched a campaign to save the agreement. At their Save My Tomato site, the campaign argues, "Without the existing trade agreement, US consumers would have fewer tomato varieties, especially in winter when many US-grown tomatoes are picked green and gassed to achieve red coloring on the grocery shelves."

The Florida tomato growers, however, argue that the agreement was simply unfair and out of date. "The domestic industry has jumped through every hoop put in our path by our opponents who simply want to protect the sweetheart deal that they've enjoyed for far too long," Florida Tomato Exchange executive vice president Reggie Brown said in a statement.

Even non-Floridian tomato farmers support abolishing the pact. Donna Vaughan, who holds a stake in Live Oak Farms in California, is one. Vaughan found her company losing against Mexican producers in recent years, as they have increased production in the summer months. She told the LA Times, "It's been difficult to compete. If the playing field was fair, I'd have no issues. But the playing field doesn't seem to be fair."

Twitter: @sterlingwong

No positions in stocks mentioned.
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