Anti-Dumping Laws in Practice: Commerce Reconsiders Tomato Trade Agreement

In recent weeks, we have come across several pro-free trade arguments that cite anti-dumping laws as protectionism in disguise. Today, NPR reports that the U.S. Department of Commerce is reconsidering a trade agreement with Mexico covering tomato imports. The story is a prime example of how trade policies are defined as much by politics as economic theory.

Central to this issue is the definition of fair competition. The agreement in question sets minimum prices for imported tomatoes, labeling all that do not meet this minimum as “lower than fair market value.” In considering ending the agreement, the Commerce Department is considering reopening an investigation into whether tomatoes imported from Mexico do, in fact, constitute “dumping.”

Interest group politics is integral to Commerce’s action. As the NPR article highlights, the state of Florida is home to many American tomato producers. Florida is a key swing state in the upcoming election. Thus, elected officials are likely to take note of its opinions.

In a more subtle way, Florida farmers might be the corollary to the Ohio manufacturing workers that our recent analysis of campaign ads highlighted. Florida farmers enjoy disproportionate political influence due to their fortuitous electoral location. Their trade battle against Mexican tomato producers will likely raise overall tomato prices in the United States; however, like Ohio manufacturing workers, the tomato producers are more likely to passionately advocate for eliminating the agreement than consumers are to actively support it. As a result, the political pressure that Florida growers exert on the Commerce Department could lead to stricter anti-dumping laws and restricted trade.

Unfortunately, scrapping this agreement is also likely to lead to heightened trade tensions with Mexico and increasing tomato prices. I am less inclined than most to accept benefits of increased trade prima facie; however, without a complete analysis of the effects of declining domestic tomato production industry on the region and nation, I would still gamble that the predicted costs of these proposed trade restrictions may outweigh their potential benefits.