U.S., Mexico in weekend talks on tomato pact

U.S. Commerce Department officials and Mexican tomato growers on Saturday were in intense talks aimed at reaching a deal to govern tomato trade between the two countries, a Commerce Department official said.

The two sides hope to reach an agreement by a Monday deadline, the official told Reuters, while declining to characterize how close the two sides were.

The department made a preliminary decision in September to terminate a 1996 U.S.-Mexico tomato trade agreement after Florida growers complained the arrangement did not protect them against Mexican tomatoes sold below the cost of production.

Mexican growers export about $1.9 billion worth of tomatoes to the United States each year. They say Florida producers have not kept pace with new growing techniques that have produced a tastier Mexican tomato and propelled sales in the United States.

The two sides now are discussing a price at which Mexico can sell its tomatoes in the United States without giving them what Florida growers say is an unfair advantage.

Terminating the trade agreement would clear the way for Florida growers to file a new anti-dumping case against Mexico, possibly leading to steep punitive duties on the imports. U.S. business groups say such action would cause tomato prices to soar for American consumers.

The decision to end the trade agreement upset Mexican growers, who had offered to renegotiate the pact. They argue the agreement has benefited U.S. consumers and brought stability to the North American market.

Mexican officials said the U.S. move appeared to be motivated by a desire to help President Barack Obama carry Florida in his election battle against Republican Mitt Romney. Obama did win the state in the November contest.

The department's preliminary decision to terminate the agreement becomes final in early March. However, the effective deadline for the two sides to reach a new deal is Monday, since the department is require to give interested parties 30 days to comment.

The U.S. Chamber of Commerce and some other U.S. business groups have sided with Mexico in the dispute, fearing Mexico could retaliate on U.S. exports if the Commerce Department imposes hefty anti-dumping duties on Mexican tomatoes.

(Reporting by Doug Palmer; Editing by Bill Trott)