U.S. groups fear Mexican trade war over Obama tomato move

Reuters

U.S. business groups said on Tuesday they were worried about a damaging trade war with Mexico if President Barack Obama's administration follows through on a preliminary decision to terminate a 16-year-old tomato trade agreement.

"We think the U.S.-Mexico economic relationship is tremendously important," Patrick Kilbride of the U.S. Chamber of Commerce told reporters on a conference call. "We don't want to see another trade war ignited."

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Florida tomato growers have pressed the Obama administration since June to terminate a 1996 agreement with Mexico on the grounds it fails to protect them against Mexican tomatoes sold in the United States below the cost of production.

Florida growers historically compete with Mexico for the U.S. winter and early spring tomato market. Terminating the pact would clear the way for Florida growers to file a new anti-dumping case against their Mexican rivals.

Last week, the U.S. Commerce Department stopped short of immediately tearing up the agreement, but took a preliminary position in favor of ending the pact. It promised a final decision "as soon as practicable" and in no more than 270 days.

The decision surprised Mexican officials and tomato producers, who have offered to renegotiate the pact. They argue the agreement has benefited U.S. consumers and brought stability to the North American market.

Bill Reinsch, president of the National Foreign Trade Council, said business groups were concerned the Obama administration might rush to make a final a decision ahead of the November 6 presidential election, in which Florida is expected to play a decisive role.

(Reporting By Doug Palmer; Editing by Doina Chiacu and Stacey Joyce)