Mexican tariff hike on U.S. exports gets quick reaction
March 23, 2009
World Trade\Interactive
Mexico’s decision this week to reimpose tariffs on $2.4 billion worth of U.S. exports in retaliation for the cancellation of a cross-border trucking pilot project has drawn a swift reaction from those affected. At least one lawmaker is seeking to overturn the program’s termination, while U.S. businesses are calling on Congress and the Obama administration to resolve the dispute quickly.
On March 19 Rep. Jeff Flake, R-Ariz., whose home state borders Mexico, introduced legislation (H.R. 1611) that would repeal the language in the fiscal year 2009 omnibus appropriations bill that ended the pilot project. “It defies logic that the U.S. would risk a trade war during a recession with our third largest trading partner just because we refuse to allow fewer than 100 trucks from Mexico into the country,” he said. The pilot project allowed up to 100 Mexico-domiciled motor carriers to operate beyond the border commercial zones and the same number of U.S. carriers to operate in Mexico.
Considering that a repeal of the omnibus language is unlikely, however, Flake also wrote to President Obama to express his interest in working with the administration to craft a cross-border trucking program that complies with U.S. commitments under NAFTA, something the White House said last week that it plans to do. Flake argued that in addition to the direct impact of the Mexican tariff increases “our consistent failure to comply with our trade agreement obligations with one of our largest trading partners will no doubt have a chilling effect on our relationships with both existing and potential trading partners” by sending a message that “the U.S. will expect other countries to comply with our every whim, while we take the liberty of rewriting our own trade obligations at will.”
The National Association of Manufacturers said it also intends to work with Congress and the administration for a “quick resolution” of this dispute. NAM Vice President for International Economic Affairs Frank Vargo pointed out that nearly 85 percent of the U.S. exports that will be affected by the Mexican tariffs consist of manufactured goods. Mexico’s retaliation “comes at a time when U.S. industry can least afford lost sales and competitiveness in important global markets,” Vargo said, adding that “this is the worst possible time to send a signal to our closest trading partners that the United States does not take its commitments seriously.”
The National Foreign Trade Council expressed similar concerns, stating that the U.S. “cannot afford to take actions that provide ammunition for our trading partners to retaliate, and in turn restrict our competitiveness.” NFTC President Bill Reinsch called on Congress to “take the appropriate actions to honor our commitments under NAFTA, and work with the Administration to swiftly resolve this dispute.”
Flake and Vargo also addressed assertions from opponents of the pilot program that Mexican trucks pose a safety hazard. Flake noted that this argument is widely seen as a “red herring used by opponents of the program to cater to special interests and advance a protectionist agenda.” He stated that under the pilot project the Department of Transportation went to “great lengths to comply with Congressional mandates regarding safety” and that “statistics have shown that Mexican carriers actually had a better safety record than their American counterparts between 2003 and 2006.” Vargo added that while “we must and will assure that all trucks on our highways are operated safely,” the U.S. government “has vast experience enforcing trucking safety” and the pilot project “strongly indicated that Mexican motor carriers (or trucking companies) can operate safely beyond the foreign commercial zone."
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