September 22, 1999

A-201-820

                  Suspension Agreement

                  Public Document

                  G1O3: MHR


RE:  The Suspension Agreement on Fresh Tomatoes from Mexico:
     Documentation Requirement for PACA Mediation

To All Interested Parties:

As you may recall, on May 2, 1997, we issued a clarification to the
Suspension Agreement on Fresh Tomatoes from Mexico (the Agreement).
The clarification explained the circumstances under which the
Department of Commerce would permit price adjustments for changes
in condition under the reference price provisions of the Agreement.
Since issuing the clarification, signatories to the agreement have
requested guidance on the specific actions they should take to
ensure that their efforts to abide by the Agreement are upheld in
any claims taken to the Department of Agriculture under the
Perishable Agricultural Commodities Act (PACA).  This letter
addresses that issue.

On September 9, 1999, we discussed this issue with James R. Frazier,
Chief of the Department of Agriculture's PACA branch, and members
of his staff.  First, we confirmed with Mr. Frazier that the
Agreement is enforceable under PACA regulations and PACA's claim
settlement process. According to Mr. Frazier, in settling a claim,
PACA will uphold actions taken by a signatory or a signatory's
representative (collectively "signatory") to comply with the
agreement to the extent that the sales contract between the
signatory and the customer establishes that the sale was subject
to the terms of the Agreement.  In other words, if, prior to making
the sale, the signatory informs the customer that the sale is
subject to the terms of the Agreement and identifies those terms,
PACA will recognize the identified terms of the Agreement as
integral to the sales contract.  In particular, signatories
should inform their customers that their contractual agreement
to allow defect claim adjustments is limited in accordance
with the Agreement and the May 2, 1997, clarification, including:

*  Claims for adjustments must be supported by an unrestricted USDA
   inspection called for no more than six hours from the time of
   arrival at the receiver.

*  The USDA inspection must find that the condition defects exceed
   the thresholds provided for in the May 2, 1997, clarification.

*  Any price adjustments will be limited to the actual percentage of
   condition defects as documented by a USDA inspection certificate.

*  The price adjustments will be limited to actual destruction
   costs, the allocated freight expense, and salvaging and
   reconditioning expenses calculated in accordance with the
   May 2, 1997, clarification.

*  The customer may not resell any defective tomatoes.  Instead, they
   must be destroyed, returned or donated to a non-profit food bank.

Signatories should provide a copy of the Agreement and especially the
May 2, 1997, clarification to any customer which may be unfamiliar with
its terms or which has questions about those terms.

Through our discussions with the PACA officials, we outlined a process
by which a signatory could provide evidence to PACA that its sales
contracts were made subject to the terms of the Agreement including,
in particular, those terms listed above.

*  The signatory should maintain written documentation demonstrating
   that it had informed its customers and the customers accepted that
   the sales were subject to the terms of the Agreement prior to
   issuing the invoice.  Indeed, a signed contract to that effect
   would be the best evidence of that fact; however, a purchase by
   the customer after being informed of the relevance of the
   Agreement is evidence of acceptance.

*  The signatory should send letters to its customers via registered
   mail, return receipt requested, informing the customers that, as
   a signatory to the Agreement, all of the signatory's sales are
   subject to the terms of the Agreement and that, by purchasing
   from them, the buyer agrees to those terms.  The letter should
   also indicate that the signatory's sales personnel do not have
   authority to alter the terms of the Agreement.

*  In addition, the signatory should include a statement on its
   order confirmation sheets that its contract with the buyer is
   subject to the terms of the Agreement as detailed in the
   signatory's "pre-season" letter and maintain a copy of the
   order confirmations and fax receipts demonstrating that they
   were sent to the customer prior to making the sale.  If the
   sale is to a first-time purchaser that did not receive a
   "pre-season" letter, a letter should be supplied to the buyer
   prior to making a sale.

*  The signatory should instruct its sales personnel to inform
   customers making purchases by telephone or at the loading dock
   that the sale is subject to the terms of the Agreement and its
   restrictions on price adjustments and, by purchasing from them,
   the buyer agrees to those terms. In fact, the sales personnel
   should provide a copy of the letter to the customer and, ideally,
   have the customer acknowledge receipt of the letter, in writing,
   prior to making the sale.  Such an established practice will help
   to insure that even new customers are informed properly of the
   terms of sale prior to completing a contract.

PACA does not require any one particular form of written documentation,
but has confirmed that if signatories maintain written evidence
demonstrating that their customers were informed that their sales were
made subject to the terms of the Agreement prior to sale, PACA will
recognize those terms as part of the sales contract.

If you have any questions on this matter, please call Richard Rimlinger
or Mark Ross at (202) 482-4477 or (202) 482-4794, respectively.

Sincerely,


Richard W. Moreland
Deputy Assistant Secretary
Import Administration