Specialty Crop Witnesses Disagree on TRQs Under Revised USMCA

While row crop farmers have been extremely happy with NAFTA and its successor, some domestic growers have been pushing for limits on imports during their growing seasons since 2017, when NAFTA was first being re-examined.

Although the previous U.S. trade representative, Robert Lighthizer, pushed for changes to antidumping rules to allow seasonal cases, that wasn't one of the changes from NAFTA to USMCA. In 2021, the International Trade Commission unanimously found that the domestic blueberry industry wasn't harmed by a flood of imports (see 2102110060). In 2022, the USTR during the Biden administration declined to open a Section 301 investigation on Mexican produce exports (see 2210240011).

Current U.S. Trade Representative Jamieson Greer told the Senate Finance Committee in May that protection for Southeastern growers who compete with Mexican produce will be an issue on the table during this review (see 2505190051).

While the Commerce Department ended an antidumping suspension agreement in July on Mexican tomatoes, more recently, the administration has been moving to restore duty-free status for imports from warmer climes. Mexican food has been duty-free (except for tomatoes) in a carve-out to reciprocal tariffs, and the administration rolled back tariffs on bananas, coffee, and other tropical fruits as the political potency of the affordability message became clear this fall.

The cost of tomatoes went up about 8% after the antidumping duties were imposed on Mexican tomatoes, according to the Federal Reserve.

Questions from the interagency panel for witnesses calling for tariff rate quotas or other forms of managed trade during the first day of the USMCA review hearing also reflected the saliency of the question of affordability.

Florida Fruit and Vegetable Association President Mike Joyner had testified that his group is asking for TRQs on strawberries, blueberries, bell peppers, sweet corn, squash and melons, because his state's market share during its late fall to late spring growing season has fallen over two decades, and because he believes the Mexican government has put its thumb on the scale by providing hundreds of millions of dollars in subsidies.

A government official on the panel asked him what TRQs would do to affordability, and what they would do for Florida growers.

"I really do believe the survival of our industry is at stake," he responded. "We do need a sense of urgency."

He didn't say his projection of how producer or consumer prices would change with TRQs, but suggested that Mexico and Peru could use monopoly pricing power in the future if nothing is done.

"If we become wholly dependent on other countries certain times of the year, it would be interesting to see what the price would be at that point," he said.

Brad Rader, Advocacy and Trade Committee chair of the Washington Red Raspberry Commission, also asked for quotas on Mexican frozen raspberry imports. He said that raspberries once left to rot in the field in Mexico are now being processed and exported, or exported for processing, and noted that the ITC earlier studied the issue. The ITC found mixed evidence that imports directly affected dropping prices for Washington growers.

Rader said that Mexican raspberries for processing sell for $1.50 a pound and his state's raspberries sell for $2.75 a pound. Rader received the same question about affordability, and the impact on growers, and didn't address the affordability question. But on the impact on growers, he said Mexican exports will put Washington growers out of business "if we don’t do anything."

California Avocado Commission President Ken Melban complained that Mexican imports have jumped by 312% over 14 years, and that Californian production has fallen by 46% over two decades.

He is asking for a TRQ from March to September, though he later said that California concentrates on West Coast sales. He also said a Section 232 investigation would be best, so that Peruvian and other exports would also be covered.

He said that avocado prices were $1.08 per pound in August, and California growers cannot stay in business at that price.

When asked about what TRQs would do to prices, he didn't respond, but did say that Mexican growers would benefit from managed trade, as well, as additional entrants are squeezing their prices, as well. "We need the government’s help to manage this market, and I don’t see another option short of that," he said.

The Interagency panel heard from more witnesses who support free trade in specialty crops, however. The Western Growers, who represent farms that grow tree nuts, fruits and vegetables in California, New Mexico, Colorado and Arizona, argued that there should be no tariff hikes on produce in the U.S.

Dennis Nuxoll, vice president for federal affairs at the group, said those four states sold 42% of the $6 billion in produce exports last year. Exports have grown sharply under NAFTA, he showed.

Fresh Produce Association of the Americas Chairwoman Raquel Espinoza, who also has an import business, said tariff-free status for Mexican produce should remain, and that trade restrictions would cause winter shortages and raise prices.

"Protectionist measures … only hurt American consumers," she said. In response to a question about what should be done, given Joyner's testimony, she said there are only a few players who compete with Mexican products in the winter, and that largely, the markets are complementary.

"Mexico’s moderate winter climate does not constitute unfair trade," she said.

North American Blueberry Council Chair Teddy Koukoulis, who is a Florida blueberry grower, questioned Joyner's narrative. "The integrated market works for everyone," he said, with consumption growing tenfold since the early 1990s. Imports enable "a year-round supply of blueberries which American consumers now expect."

He acknowledged that the wage disparity in Mexico is frustrating, and said the council supports improved enforcement of labor standards in Mexico.

Driscoll's CEO Soren Bjorn, whose California company sources fresh blackberries, strawberries and raspberries from growers across North America, said that 30 years ago, fresh berries were a summer luxury, and now they're affordable year-round. He also questioned Joyner's argument, saying that Florida's acreage of winter strawberries grew from 9,000 acres to 16,000 acres since 2020.

An assistant USTR for the Western Hemisphere asked Bjorn whether he would do anything about Mexican imports. He said, "The No. 1 thing we see that can be improved is really the [labor] enforcement mechanisms," since Mexican austerity budgets have starved its government agencies.