Guillermo Arias/AP
A truck drives out the Mexican transport custom of Otay after crossing into Mexico from
the United States.

Mexico Retaliates Against the US Over Cross-Border Trucking Dispute

March 23, 2009 02:00 PM
by Sarah Amandolare
After the U.S. ended a NAFTA trucking program, Mexico responded by applying tariffs to 90 products, prompting concerns over economic protectionism.

Implications of the Tariff

A test program of the North American Free Trade Agreement (NAFTA) that permitted Mexican trucks to drive into the U.S. to deliver and pick up goods has ended, prompting Mexico to apply new tariffs to 90 U.S. products, beginning this week.

According to Bloomberg, the trucking program, which was implemented in 2007 and renewed last August for two more years, “was canceled under a provision in the $410 billion omnibus spending bill passed by Congress this month.” Mexico's new tariffs are applicable to various goods, including produce and toothpaste, and range from 10 percent to 45 percent.
Sidney Weintraub of the Center for Strategic and International Studies in Washington told Bloomberg that the tariffs would “have a big impact on the companies that export those items” and "could take them out of market."

Officials in Mexico have called on U.S. companies to pressure Congress “to reinstate the program,” which is favored by Sen. John McCain. The Arizona Republican says ending the trucking program will hurt American consumers already facing hard times.
Is Protectionism Taking Hold? 

According to NPR, the trucking program has been “vigorously opposed by the Teamsters union, which represents U.S. truck drivers,” since it began as part of NAFTA in 1994. Teamsters have claimed Mexican trucks are not safe, which has been disproved, but the American union carries great weight with Congress. NPR reports, “Congress killed the pilot program last week at the urging of the Teamsters union and their supporters.”

Some are calling the program cancellation an example of protectionism, which is almost universally regarded as “a bad thing” by economists right now. According to NPR, protectionism “is just what is developing between the U.S. and Mexico.”

However, White House spokesman Robert Gibbs told the press that the Obama administration would “work with Congress and the Mexican government” to develop alternative ways for Mexican trucks to work in the U.S.

According to a March 13 article in YaleGlobal that discussed trade policies and global economic recovery, “the recession emboldens protectionist forces.”
“Trade is experiencing a sudden, severe and globally synchronized collapse,” but the protectionism of today is different than the “1930s-style protection that relies on transparent tariff barriers,” YaleGlobal reported. Instead, today's protectionist measures are discriminating ”against foreign firms, workers and investors.”

Protectionism Naysayers

In early March, U.K. newspaper The Daily Telegraph reported that British Prime Minister Gordon Brown planned to urge the U.S. against a protectionist policy. “Some US senators and representatives favour ‘Buy American’ policies as a way of boosting their domestic economic recovery,” reported the Telegraph. Brown, however, contended that world leaders “should encourage trade” and avoid “turning inwards.”

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Background: Obama and free trade

Last November, The Christian Science Monitor reported that Latin American countries, including Colombia, were concerned about the Obama administration's economic and trade policies. During the campaign, Obama “said he would oppose a free-trade deal with Colombia negotiated by the Bush administration, and suggested he may seek to renegotiate” NAFTA.

Such statements had Latin American businesses and “conservative governments” worried about “a more closed, protectionist America.”

But in June 2008, during the presidential campaign, CBS News reported that Obama “made clear in speeches that he does not oppose global trade.” Obama's economic advisor Daniel Tarullo told CBS that Obama “recognizes the impact of trade upon all Americans and wants a trade policy that works for all Americans, as opposed to Senator McCain who appears to never having seen a trade agreement he doesn't like.”

In July 2008, the Council on Foreign Relations provided a comparison of the 2008 presidential candidates' policies and opinions on free trade. According to the Web site, Obama “has expressed concern about free trade agreements that do not include labor and environmental protections,” and during a speech in February 2008, said he “will not sign another trade agreement unless it has protections for our environment and protections for American workers.”

Opinion & Analysis: Reinstate the trucking program

A March 18 editorial in The New York Times warns that Congress is not heeding President Obama's “warning that tit-for-tat protectionism could drive the world into an even worse economic slump than it is already in.”

The Times, however, said “it is time for Mr. Obama to put some political muscle behind his declared support for open trade,” starting with reinstating the trucking program or beginning a new program. “And he must make clear that—sometime soon—all properly inspected Mexican trucks must be able to work throughout the country, as Nafta requires,” the editorial said.

Related Topic: The Roquefort embargo, another retaliatory tariff

As one of his final acts in office, President Bush increased the tariff on Roquefort by 300 percent, making it virtually impossible for the French to sell the popular cheese in the United States. The World Trade Organization (WTO) authorized the tariff in both the U.S. and Canada, in response to the European Union's continued ban on beef from hormone-treated animals.

Reference: Free trade and protectionism in U.S. history

In an article for the Center for Trade Policy Studies, Bruce Bartlett contends that the U.S. “grew in spite of import restrictions,” and proceeds to outline various protectionist and tariff policies in the U.S. throughout history.

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