New Tomato Suspension Agreement Signed

New Tomato Suspension Agreement Signed

On May 7, 2019, the U.S. Department of Commerce (the  “USDOC”) announced the termination of the 2013 Suspension Agreement on Fresh Tomatoes from Mexico after the USDOC and the signatories from Mexico failed to reach an agreement on revisions to the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. As a result, duties in the amount of 17.56 % of the dutiable value were imposed on the importer of record, which are typically distributors, for imports into the United States of certain tomatoes from Mexico.

After extensive negotiations and to the relief of many, the Agreement Suspending the Antidumping Duty Investigation on Fresh Tomatoes From Mexico,  became effective on September 19, 2019 (the “2019 Suspension Agreement”).

As a result, U.S. distributors importing fresh and chilled tomatoes which have Mexico as their origin, except those tomatoes which are for processing, that are covered by the 2019 Suspension Agreement (the “Tomatoes”) should undertake the following:

  • Consult with their attorneys to ascertain the proper handling of the refund of duties to distributors which were imposed on and paid by distributors relating to the tomatoes imported from Mexico between May 7, 2019 and September 19, 2019.
  • Enter into proper distribution agreements and/or amendments to existing distribution agreements with growers, including to provide for the following as it relates to the Tomatoes, in accordance with and as required by the 2019 Suspension Agreement:
    • Distributor’s agreement to comply with the 2019 Suspension Agreement, including the covenant not to sell Tomatoes for less than the reference price, less permitted adjustments.
    • Maintain and provide documentation and information relating to the Tomatoes as required.
    • Request and pay for USDA crossing inspections of certain Tomatoes.
    • Resolve all claims and complete all documentation relating to the Tomatoes within the required time periods and with USDA inspections, unless the claim is referred toPACA for mediation.
    • Provide that the grower pay for all expenses arising out of the 2019 Suspension Agreement, except as prohibited.
    • Provide that the grower indemnify Distributor for all matters relating to the 2019 Suspension Agreement, except as prohibited.
    • Enter into written contracts with third parties and place appropriate language on order confirmations, invoices and bills of lading to ensure that adjustments for claims relating to the Tomatoes inconsistent with the 2019 Suspension Agreement will not be permitted.?
  • For sales of Tomatoes to Canada, maintain certain information and notify the Canadian customer that resale of the Tomatoes from Canada into the United States must be in accordance with the terms of the 2019 Suspension Agreement.

Please click here for the administrative review.
Please click here for the suspension document.