The Dallas Morning News on Sunday does its own story on the anniversary of Mexico’s tariffs retaliating against the United States for violating NAFTA, also reporting on Brazil’s WTO-sanctioned tariffs retaliating against the U.S. cotton program, “Companies caught in the middle of U.S.-Mexico trucking dispute“:

“We have heard from American exporters,” U.S. Trade Representative Ron Kirk said Tuesday. “We understand the sense of urgency. We will work as quickly as we can to see if we can’t come up with an acceptable solution.”

Transportation Secretary Ray LaHood has assured exporters that he’s hopeful a deal can be reached soon. But he said the same thing a year ago.

“We have not yet floated any proposals with Mexico and look forward to consulting with members of Congress,” the department’s Federal Motor Carrier Safety Administration said Thursday in a statement.

The Mexican embassy in Washington issued a news release last week:

We continue to seek every opportunity for dialogue and engagement with the Administration and Congress on this issue, and we urge the former to come forward with a specific proposal to resolve the cross-border trucking impasse.

In the meantime, Mexico will continue to exercise all legal means available to achieve full compliance by the United States with its commitments under the NAFTA. The safety of Mexican carriers and drivers operating in the United States has been well documented by an Independent Evaluation Panel, the Inspector General of the U.S. DOT and the Congressional Research Service. Mexico is the United States’ second-largest export market and the second largest buyer of US exports. It remains a steadfast supporter of free and fair trade, and will continue to work actively and responsibly with Congress and the Administration to find a solution.

The Morning News story highlights the impact of the Mexican and Brazilian tariffs on Texas-based Mary Kay, the personal care products company that has paid $5.4 million in Mexican tariffs over the last year.

As for the Brazilian retaliation…

• Bloomberg, “Brazil Raises Tariffs on U.S. Goods, to Break Patents“
• Capital Press, “Brazilian tariffs could stall exports,” reporting on the consequences to the ag sector.
• The Economist, “Picking a Fight“

Here’s the list of U.S. products and tariff percentages applied by Brazil, from the Brazilian Embassy. We’ll also put the list in the extended entry section below.

Today we mark the anniversary of the imposition of retaliatory tariffs on a wide range of U.S. manufactured exports to Mexico. As a result of Congress yanking funding for a pilot program to demonstrate the safety of Mexican trucks operating in the United States –- and the program’s interim report showed they’re just as safe as U.S. trucks — $2.4 billion worth of U.S. exports to Mexico, ranging from grapes to dog food to refrigerators, have spent the last year facing high tariffs that have priced them far above similar products sold in Mexico by our competitors around the world.

This may not seem like an enormous issue, in the grand scheme of things, but it is real jobs that have been lost, real communities that in some cases have lost the major employer, and it is small and medium manufacturers (SMMs) who have been hit hard in particular. Over 95 percent of the firms that export to NAFTA are SMMs, and for many of them, loss of Mexico as an export market could be the difference between viability and closing up shop.

The National Association of Manufacturers has studied the impact of these tariffs, and found that about 16,000 U.S. manufacturing jobs have either been lost or are at risk of being lost as a result of their levy. Sixty-five percent of the targeted items are manufactured goods, including chemicals, paper and printed materials, household and personal care products, machinery, and processed food products.

There are three ways you can deal with these tariffs, and we’ve seen manufacturing in America try all three. You can shut down your U.S. production and move it to Mexico, Canada, or another country. That has happened. You can try and stick your Mexican distributors with the cost of the tariff. You can try to do that, but in many cases they’re just finding new suppliers from other countries, and the U.S. market share is dropping. Or, you can eat the tariffs as part of your cost of business. Adding a 20 percent tariff to your costs to try and preserve market share is, at best, a short-term solution that leads to loss of profits. Do it long enough, and you’ll be searching for alternate production lines in countries where they don’t face tariff retaliation. This takes the pain from the bottom line to the unemployment line, and it’s something many U.S. companies – after an entire year of facing such tariffs – are beginning to do. The situation is only going to grow worse in the coming months.

A bipartisan group of House members — 27 Democrats, 29 Republicans — have sent Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk a strongly written letter demanding action and accountability on Administration’s plans to resolve the dispute over Mexican trucks on U.S. roads. “The current situation is unsustainable and untenable,” they write.

Not just the inaction, but the Administration’s failure to match words with deeds that frustrates the House members. Last March, Mexico hit more than 90 U.S. manufactured and agricultural goods with tariffs ranging (mostly) from 10 to 45 percent in retaliation for the U.S.’s failure to abide by its trade commitments on cross-border trucking. (See WSJ, Reuters.)

From the letter:

We are writing to express our concern about the lack of action and transparency by the United States Trade Representative and the Department of Transportation to address tariffs imposed by Mexico on U.S. agricultural and manufacturing products in response to the removal of the cross-border trucking pilot program. These tariffs have had a devastating impact on our local industries and area economies. Therefore, given the importance of this matter to our constituents, we urge you to immediately implement a plan of action to rectify this situation. …

Over the past 11 months, Administration officials have repeatedly expressed confidence that a resolution ot the current dispute could be found that would fulfill our obligations to Mexico under the North American Free Trade Agreement. President Obama expressed his commitment to resolving the issue to President Calderon during their meeting in Guadalajara, Mexico in August, 2009. However, to date, the Administration has not shared any of the principles or the parameters of a proposed plan.

The House members “implore” the LaHood and Kirk to work toward a quick solution, and they ask the officials to communicate their plans for resolving the issue.

President Obama is headed to Guadalajara, Mexico, this weekend to meet with Mexican President Felipe Calderon, and Canadian Prime Minister Stephen Harper. The White House held a briefing that included Michael Froman, international economic affairs advisor. The briefing included this exchange on the Mexican truck issue:

Q … If you could tell us what the status is about the retaliatory tariffs from Mexico having to do with the trucking dispute.

MR. FROMAN: There are retaliatory tariffs in place, as you know. This is an area that we’re quite focused on. We’re working with Congress to address safety concerns that they have about the U.S.-Mexican trucking program, and we’ll do so in a way that’s consistent with our international obligations.

Q When he was a senator, President Obama voted against the pilot program. Is that the position of the administration?

MR. FROMAN: I think the position of the administration is we’d like to work with Congress to address their safety concerns and do so in a way that’s consistent with our international obligations.

Q Meaning, to resume the pilot program?

MR. FROMAN: To see whether we can find a way of addressing their concerns and meeting our international obligations.

So work already! The executive branch agencies have finished their assignments, so now it’s really a matter of the Administration going to Congress. In the meantime…

Makers of paper, batteries, toothpaste and grapes are paying tariffs on $2.4 billion of exports to Mexico after that country retaliated for a U.S. ban on Mexican trucks. Transportation Secretary Ray LaHood’s comment on Aug. 4 that he’s too busy with the “cash for clunkers” auto-discount program to focus on the truck dispute has fueled some discontent among exporters.

“On the U.S. side, there is a lack of political desire to solve this,” said Ken Barbic, director of federal affairs at Western Growers of Irvine, California, which represents grape, lettuce, date and pear growers hurt by the tariffs.

California’s agriculture industry has been hit especially hard, but the Bloomberg story notes the manufacturers who have also been affected, prominently Appleton Papers of Appleton, Wisc.

From The Independent (U.K.): “France in protectionist row as Renault switches Slovenia jobs“:

France was embroiled in a protectionism row yesterday after the government announced that the assembly of some Renault cars would be shifted from Slovenia to the Paris area, creating 400 new jobs.

President Nicolas Sarkozy later insisted that the move would not cause any job losses in a fellow EU state, but the European Commission said it planned to launch an investigation.

M. Sarkozy infuriated eastern European members of the EU last month when he linked €6bn (£5.6bn) in cheap loans to the struggling French auto industry to a guarantee that car-making jobs would remain in France. He even questioned why French car firms needed plants in eastern Europe at all. Alarm bells rang in Brussels and across eastern Europe yesterday morning when the French Industry Minister, Luc Chatel, announced that production of some Clio cars would transfer from Slovenia to a giant Renault assembly plant at Flins in the Seine valley, west of Paris.

Los Angeles Times, “U.S.-Mexico relationship hits some bumps“:

Reporting from Washington and Mexico City — Secretary of State Hillary Rodham Clinton ventures south of the border this week at a moment when the tricky dynamics of the U.S.-Mexico relationship are on full display.

It’s too soon to call it a rough patch, but a flap over cross-border trucking and unwelcome words about the drug war have led Mexico to push back against its powerful neighbor recently.

The trade dispute got tetchy last week when Mexico raised tariffs on scores of U.S. imports — retaliation for Washington’s decision to stop funding a program that allowed some Mexican trucks on U.S. highways under a free-trade agreement.

We don’t want to oversell the “rising tide of protectionism” theme. The Mexican tariff reaction was relatively modest unless you’re in agriculture in Oregon, Washington and California, and the Administration has signaled it desire for commercial comity.

It also seems a good time to link to this piece by Dan Ikenson of the Cato Institute, a free trader through and through, “A Protectionism Fling: Why Tariff Hikes and Other Trade Barriers Will Be Short-Lived”:

Despite some episodes of backsliding, the world is unlikely to witness a significant departure from the trend toward trade and investment liberalization that has been evident since the end of World War II. An increasing number of governments have come to recognize that optimal economic outcomes arise under conditions where policies enhance—rather than limit—the freedom of people to transact with others, including foreigners. Protectionism limits choices and thereby undermines human liberty and economic efficiency.

Reasonably well-respected trade rules and the reality of a global economic system that renders trade openness an imperative for success are some of the reasons to believe that any protectionist outbreak will be fleeting. Indeed, policymakers would be advised to respond to the downturn by reducing their trade and investment barriers unilaterally because doing so expands choices, reduces costs, and spurs the kinds of structural reforms that facilitate economic growth.

From Reuters, “Mexico slaps tariffs on U.S. goods in truck feud“:

MEXICO CITY/WASHINGTON (Reuters) - Mexico slapped tariffs on 90 American agricultural and manufactured exports on Monday in retaliation for Washington’s move to block Mexican trucks from using U.S. highways.

Mexican Economy Minister Gerardo Ruiz said about $2.4 billion worth of exports from 40 U.S. states would be affected and that his government would soon publish a list of them.

Last week, the U.S. Congress canceled funding for a test program begun by the Bush administration that allowed Mexican long-haul trucks to circulate in the United States in compliance with the North American Free Trade Agreement.

“We consider this action by the United States to be mistaken, protectionist and clearly in violation of (NAFTA),” Ruiz told reporters in Mexico City.

More…

• Wall Street Journal editorial, “The Teamsters War“
• Wall Street Journal, Mary Anastasia O’Grady, “Washington Starts Another Trade War“

In related news, Brazil’s president issues a warning, “Lula Urges Nations to Avoid ‘Drug’ of Protectionism“:

March 16 (Bloomberg) — Brazilian President Luiz Inacio Lula da Silva said countries seeking to help their economies weather the global slump must avoid turning to protectionist policies.

“Protectionism is a drug that provides temporary relief, but in the end leads to major crisis,” Lula told investors in New York today.

Hoffa: Congress wants the border closed.

As noted immediately below, the House yesterday voted 395-18 to pass H.R. 6630, the bill that renege on U.S. NAFTA commitments by blocking the operation of Mexican trucks in the United States. The floor debate featured no one speaking in opposition, contained a lot of aggressive criticism of the Bush administration and DOT and eventually deteriorated in a partisan dispute over energy policy. In other words, there wasn’t really a debate per se, but rather a series of statements.

Some would dispute our characterization of the bill, acknowledged. From Rep. John Duncan (R-TN), who managed the bill for the Republicans:

Now, let me say once again: this is a very moderate, sensible, balanced, and reasonable bill. It does not prohibit some sort of program for Mexican trucking companies that are safe and don’t have all these violations. It would allow them to come in after additional information is given to the Congress about the results from this 1-year demonstration project. That’s not much to ask for from the administration, and we need that information about safety violations.

We need to find out whether these Mexican truck drivers have drug addictions or they have numerous safety violations, find out whether some of these trucking companies are coming in, these trucks are coming in here in a very unsafe and uninsured condition.

OK. But organized labor, which drove the debate during a campaign year, has never been a big supporter of moderate, sensible, balanced and reasonable. The Teamsters issued a statement applauding the clear effect of the legislation, with President Jim Hoffa declaring: “This bill makes it very clear that Congress wants the border closed. This time, the Bush administration can’t pretend it doesn’t understand what Congress means.”

That is, Hoffa sees this as a victory in a battle in the great trade war. And the Mexicans see a defeat, but they also note they have the ability to exact consequences. From Reuters:

Still, the Mexican Embassy in Washington said it was “deeply concerned” about the House vote and welcomed the administration’s intention to veto the measure.

“Mexico has fulfilled its NAFTA obligations and expects the U.S. do the same. Should the bill be enacted into law, the government of Mexico will consider taking all the appropriate actions, including remedies or countermeasures under the North American Free Trade Agreement,” the embassy statement said.