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  • Rotten Tomato Trade Policy from the Obama Administration


    U.S. consumers will soon be paying more for tomatoes thanks to the Obama Administration’s new trade policy.

    Under a just-announced agreement with Mexico, Americans reportedly will be paying up to twice as much for tomatoes grown in Mexico. The increase is entirely due to minimum prices imposed by the Obama Administration because U.S. tomato growers don’t want to compete with Mexican tomato producers.

    According to Francisco J. Sanchez, the U.S. under secretary of commerce for international trade: “The draft agreement raises reference prices substantially, in some cases more than double the current reference price for certain products.”

    The tomato agreement undermines the spirit of the North American Free Trade Agreement (NAFTA), which was designed to allow consumers in Canada, Mexico, and the United States to do business with each other without interference from greedy special interests seeking government protection from competition.

    However, NAFTA allowed each country to maintain protectionist anti-dumping laws. This loophole was seized on by U.S. tomato producers. According to an executive for the Florida Tomato Exchange, “Mexican tomatoes were being sold in the U.S. market in rapidly increasing volumes at prices that did not reflect the cost of production.”

    On the surface, the charge sounds far-fetched—Florida’s tomato growers seriously expected the Obama Administration to believe that Mexican farmers were toiling in their tomato fields year after year, producing tomatoes in order to sell them to Americans at a loss. If that’s really the business model used by Mexican farmers, perhaps the Obama Administration should send them a thank-you letter.

    Instead, the Administration decided to force Americans to pay more for tomatoes. The Mexican government and representatives from Mexican tomato growers grudgingly accepted the new mandatory minimum prices because under protectionist anti-dumping laws, it was possible that the U.S. government could impose even larger penalties on imported tomatoes.

    A 2009 Wall Street Journal editorial suggested that the Obama Administration might wind up being the most protectionist administration since that of Herbert Hoover. This rotten deal on tomato imports is evidence that the Journal may well have been right.

    Posted in Economics [slideshow_deploy]

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