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.