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U.S., Mexico can manage tomato trade dispute: U.S. official

By Doug Palmer

WASHINGTON (Reuters) - The United States and Mexico can manage a heated dispute over bilateral tomato trade without it widening into a broader trade war, a top U.S. trade official said on Thursday in response to industry concerns.

"You're bound to have tensions" in any trade relationship as large as the United States and Mexico have, Francisco Sanchez, under secretary of commerce for international trade, told Reuters in an interview.

"Historically, when we've had them, we've gotten through them. I'm pretty confident that we'll get through this one too in a way that preserves the very strong and important relationship," Sanchez said.

U.S. groups such as the Chamber of Commerce and the National Foreign Trade Council have raised concern about a possible trade war after the Commerce Department announced a preliminary decision last week in favor of terminating a 16-year-old tomato trade agreement with Mexico.

Mexican officials also decried the decision and said it appeared to be motivated by presidential politics.

Tomato growers in Florida, one of a handful of battleground states expected to determine the November 6 presidential election, have been pressing President Barack Obama's administration since June to terminate the pact.

They argue the agreement, which sets a minimum price for Mexican tomatoes sold in the United States, is badly out of date and does not reflect their current production costs.

Mexican growers prefer the stability provide by the pact, and have offered to renegotiate it in the hopes of avoiding a costly new anti-dumping complaint filed by Florida producers.

Sanchez acknowledged the Commerce Department's decision has stirred strong emotions on both sides of the U.S.-Mexico border, but denied it was motivated by politics.

"We have a process we follow ... We will not rush it, nor will we extend it. We will take the time necessary to do an appropriate job," Sanchez said.

The department has said it would make a final decision on whether to terminate the agreement "as soon as practicable" but within no more than 270 days.

It is difficult to give a more definite time frame, but the process could "take a while," Sanchez said.

"We're going to do what we need to do to run this process fairly. That means following the time frames, reading the material carefully that comes to us and making a decision based on the facts," Sanchez said.

Mexican growers have a right to consult with the department as part of the review process, and the U.S. side will weigh their proposal to renegotiate the pact, he said.

(Reporting By Doug Palmer; Editing by Vicki Allen)

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