Interpretation of Suspension Agreement Would Lead to 'Absurd Results,' Mexican Tomato Growers Say

The "U.S. shipping point" must be a location from which tomatoes ship from inside the U.S., and any expenses between the U.S. border and that point should be included in reference prices under the 2019 antidumping duty suspension agreement on Mexican tomatoes, Mexican exporters said in a June 3 memo. The memo responds to allegations of non-compliance during an administrative review of the agreement from the Florida Tomato Exchange, which says imports should be judged based on the price immediately after crossing the border. The FTE's interpretation cuts directly against the plain language of the agreement and uses an interpretation of the term "free on board (FOB) U.S. shipping point" that would lead to "absurd results" in how the agreement is applied, the Mexican growers said.

The effect of the FTE's interpretation is that the reference price would not include expenses incurred beyond the U.S.-Mexico border. "Consequently, the basis of the reference price (“FOB U.S. shipping point”) in Appendix A of the 2019 Agreement would be the point of entry (i.e., the U.S.-Mexico border), and selling agents would be required to add all expenses incurred upon crossing the border to the reference price," the memo explained. To this end, the FTE, in its own comments to Commerce on April 29, is requesting data on "U.S. inventory carrying costs, U.S. warehousing expense, U.S. brokerage and handling fees, USDA inspection fees, and selling agent commission fees," for the Mexican signatories."

The Mexican signatories identified a section of the 2019 agreement that sets two shipping points when creating the reference point: the Mexican and the U.S. points. The agreement even stipulates that each point is on its respective side of the border. "Contrary to FTE’s argument, neither of those points is at the U.S.-Mexico border, which the 2019 Agreement defines separately as the 'point of entry,'" the memo said. "The Department may not treat 'U.S. shipping point' and 'U.S. point of entry' as synonymous when neither the text of the 2019 Agreement nor industry context supports such an interpretation." The signatories also point out that references to "palletizing" and "cooling charges" confirm that the referenced "shipping point" is a location where tomatoes are shipped and not a spot at the border.

FTE also erred by using a proposed interpretation of the term "FOB U.S. shipping point," that is not consistent with the meaning of FOB in "materially relevant sources of U.S. law," the signatories said. The two main sources of that definition, as the signatories laid out, stem from the Uniform Commercial Code and the regulations establishing the Perishable Agricultural Commodities Act. These definitions find that FOB requires a seller, a buyer and on-boarding to a vehicle, and the FTE's interpretation would violate at least one of these conditions, the signatories said.