Mexico and USA in Protectionist Battle

I'm all for letting the trucks over.





http://www.bloomberg.com/apps/news?pid=20601086&sid=anDCFzIjzDbc&refer=latin_america
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Mexico Retaliates With Tariffs After U.S. Bans Trucks (Update1)
By Jonathan J. Levin and Mark Drajem

March 16 (Bloomberg) -- Mexico put tariffs on $2.4 billion of U.S. merchandise after Congress suspended a program to allow some Mexican trucks to deliver goods across the U.S.

The tariffs, allowed under the North American Free Trade Agreement, or Nafta, will affect about 90 items from 40 U.S. states, Economy Minister Gerardo Ruiz Mateos said in an e-mailed statement. Ruiz Mateos estimated the amount of exports at risk at about $2.4 billion, based on 2007 trade levels.

“We consider this action by the United States to be wrong, protectionist and clearly in violation of the treaty,” Ruiz Mateos said.

The trade dispute comes as U.S. exports in January fell worldwide to the lowest level since September 2006. The Obama administration today vowed to work with Congress to come up with an alternative to the pilot program, which was canceled under a provision in a $410 billion government spending bill passed by Congress this month.

Groups including the Owner-Operator Independent Drivers Association, in Grain Valley, Missouri, said Mexican trucks are a hazard and allowing them across the border could dampen wages for U.S. drivers.

A panel of judges ruled in 2001 that the U.S. was violating Nafta by prohibiting Mexican trucks from American highways. They ruled that American regulators could inspect and impose safety rules. The Bush administration started a demonstration program two years ago to allow some trucks to travel into the U.S.

Moving Freight

President Barack Obama directed his administration “to propose legislation creating a new trucking project that will meet the legitimate concerns of Congress and our Nafta commitments,” Robert Gibbs, a White House spokesman, said today.

Senator Byron Dorgan, the sponsor of the amendment that removed money from the pilot program, said he is willing to work to work on the issue, the U.S. trade office said in a statement.

The American Trucking Associations and U.S. Chamber of Commerce supported the program and protested its withdrawal.

“The benefit of opening the border is you streamline the system, which is the way the Canadian border operates and has operated since 1982,” Stephen Russell, chief executive of Celadon Group Inc., an Indianapolis-based trucking company that serves all three nations, said in an interview last week.

When Celadon moves freight to Mexico, it transfers the trailer to a short-haul Mexican trucker who takes it to the border and then again to a long-haul Mexican trucker to move the goods from the border to their destination, Russell said.

“The right response from Mexico would be to make sure its drivers and trucks are safe enough to use our highways without endangering our drivers,” Teamsters President Jim Hoffa said in a statement. “The border must stay closed until Mexico holds up its end of the bargain.”