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“DEVALUATION OF THE MEXICAN PESO” mentioning the U.S. Dept of Agriculture was published in the Extensions of Remarks section on pages E1024 on May 12, 1995.
The publication is reproduced in full below:
DEVALUATION OF THE MEXICAN PESO
______
HON. MARK ADAM FOLEY
of florida
in the house of representatives
Friday, May 12, 1995
Mr. FOLEY. Mr. Speaker, today I am introducing legislation to alleviate the dislocation of a specific sector of the Florida economy due to the devaluation of the peso. While this legislation is designed only to relieve the problems experienced by the winter tomato industry in south Florida, it is my belief that the underlying intent of the legislation should be considered to be applied to all areas of trade within the North American Free-Trade Agreement [NAFTA].
Let me outline some ideas about NAFTA preamble of the agreement--the governments of the United States, Canada, and Mexico resolved to: First, create an expanded and secure market for the goods and services produced in their territories; second, reduce distortions to trade; third, ensure a predictable commercial framework for business planning and investment; and fourth, promote sustainable development.
And finally, the second objective of NAFTA is to: ``Promote conditions of fair competition in the free trade area.''
When the Mexican peso underwent the devaluation beginning in December 1994--these objectives were tossed out the window. The administration's only response was a multi-billion-dollar bailout of the Mexican currency with American taxpayer dollars. However what the administration failed to address was the impact of this devaluation of the peso on our vitally important domestic industries. Nobody knows for certain about the overall effect, but let me outline the effect on an industry that is important to my home State of Florida.
Florida's tomato industry generates an estimated $650 million in economic activity, and employs more than 2,000 workers. However, over the past 2 years, Mexico's share of the United States winter tomato market has nearly doubled. A devaluation of the Mexican currency has caused a massive export of Mexican tomatoes to the United States markets where a stronger, more stable currency is the real objective.
During the winter season, Florida produces about 95 percent of the fresh market tomatoes grown in the United States, with the only competition coming from Mexico. As the attached chart shows, the volume of Mexican tomato imports has dramatically increased over the past year due to the devaluation of the peso.
How has this affected the bottom line of tomato producers in Florida? They have seen the prices for their tomatoes decline from $15 for a 25 pound carton to only $5 from the period of January 30 to February 15 of this year. This steady decline in prices can clearly be attributable for the search for stable U.S. dollars.
Mr. Speaker, it is my believe that the recent peso devaluation undermines the bases for the establishment of tariffs and more than eclipses the tariffs negotiated to help transition the Florida tomato industry into a free trade agreement during the 10-year phase out period for tomatoes.
Therefore, today I am introducing legislation to link the tariff of tomatoes to the devaluation of the Mexican peso. This is a simple solution that would multiply the tariff on tomatoes by an equal percentage of the peso devaluation thereby establishing a fair and stable climate for trade between Mexico and the United States.
Furthermore, this legislation directs the Secretary of Agriculture to determine the nature and extent of harm done to the domestic industry and take actions to remedy such harm. Mr. Speaker, in 1990, there were 230 tomato growers in Florida, today, there are less than 100 with the threat of dumping from Mexico occurring every year.
Finally, this legislation takes steps to ensure that Mexican tomatoes entering the United States meet the same standards established by the United States Department of Agriculture for domestic tomatoes. The Department has been far too lax in allowing in Mexican tomatoes which do not meet the same United States standards.
While some may argue that this legislation will violate the NAFTA, I dispute this most vehemently. NAFTA was to establish clear and stable rules of trade between the United States and Mexico. This legislation would ensure that to be the case by reducing any distortions to trade due to the devaluation of the peso. I urge my colleagues to carefully examine the impact of the devaluation of the peso on all industries around the country and determine if this would be a workable solution for other sectors of the economy.
FLORIDA VEGETABLE REPORT FEDERAL-STATE MARKET NEWS USDA AND FDACS TOMATO
SHIPMENTS 1993-94 AND 1994-95
[1,000 25-lb Cartons]
------------------------------------------------------------------------
1994-95 1993-94
Shipments -------------------- Shipments -------------------
through Florida Mexico through Florida Mexico
------------------------------------------------------------------------
1/29/95........ 12,942 11,635 1/30/94........ 16,374 11,061
1/30/95........ 75 292 1/31/94........ 172 271
1/31/95........ 97 292 2/01/94........ 232 195
2/01/95........ 143 352 2/02/94........ 242 245
2/02/95........ 132 346 2/03/94........ 206 206
2/03/95........ 95 336 2/04/94........ 142 193
2/04/95........ 93 339 2/05/94........ 242 223
2/05/95........ 48 6 2/06/94........ 104 6
-------------------- -------------------
Total...... 13,625 13,598 ............... 17,714 12,400
==================== ===================
2/06/95........ 84 423 2/07/94........ 162 220
2/07/95........ 164 384 2/08/94........ 326 258
2/08/95........ 154 420 2/09/94........ 282 308
2/09/95........ 94 448 2/10/94........ 234 268
2/10/95........ 134 525 2/11/94........ 218 273
2/11/95........ 108 609 2/12/94........ 284 268
2/12/95........ 49 8 2/13/94........ 129 2
-------------------- -------------------
Total...... 14,412 16,415 ............... 19,349 13,997
2/13/95........ 76 768 2/14/94........ 179 378
-------------------- -------------------
Total...... 14,488 17,183 ............... 19,528 14,375
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