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US agrees to end investigation into Mexican tomatoes amid concessions

The Trump administration reached a tentative deal with Mexico to suspend an investigation that could have resulted in steep tariffs on Mexican tomatoes, a possible truce in a longstanding battle over claims that Mexican farmers were selling their produce in the U.S. below fair value, harming U.S. producers.

The U.S. Department of Commerce said in a news release Aug. 21 that the two sides reached an agreement late the previous night that closes loopholes from past agreements that allowed for sales of tomatoes below fair value, and would allow for more stringent U.S. inspections of the produce.

The draft agreement has enforcement provisions that set fair value prices for certain types of tomatoes and allows Commerce to audit up to 80 Mexican tomato producers per quarter to protect against "low-quality, poor-condition" Mexican tomatoes.

Commerce Secretary Wilbur Ross said in the news release that the agreement to suspend the investigation prevents the U.S. from imposing 25% tariffs on Mexican tomato imports — valued at about $2 billion annually — as part of the antidumping duty investigation it reopened on imports of Mexican fresh tomatoes earlier in the year. The U.S. applied 17.5% tariffs to Mexican tomatoes in May, which led to declines in the import of the produce.

"This draft agreement meets the needs of both sides and avoids the need for antidumping duties," Ross said.

Tomato growers and agriculture groups as well as lawmakers including Sen. Marco Rubio, R-Fla. have lamented what they see as Mexican producers undercutting U.S. tomato growers, leading to lost jobs and sales. The Commerce Department said the agreement will help farmers in Florida, Texas and Arizona specifically.

Commerce reopened the antidumping investigation in February after it suspended the agreement in March 2013 on the basis that Mexican tomato producers would sell the produce at or above market value. The U.S. formally withdrew from the 2013 agreement after it said Mexican tomatoes were being sold in the U.S. at less than fair value.

A review period is slated for the next 30 days, at which point both sides can sign a final agreement.

Graciela Marquez Colin, Mexico's economy minister, said in a tweet that the result is good news because it will keep open the country's largest tomato export market.

The move comes as U.S. ratification of the United States-Mexico-Canada Agreement continues to loom over the heads of the North American trading partners. Numerous industry groups have called on Congress to ratify the deal, which is stuck in Congress.