Mexican trucks Archives - Shopfloor

Mexico’s Calderon Comes to Town, as Trucks Still Stalled

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Mexican President Felipe Calderon is in town this week for a brief visit. Mexico is building toward its Presidential elections in July 2012, and the U.S.-Mexico relationship is always an issue in the election there as well as here. We don’t expect the lingering inability of the Obama Administration to resolve the NAFTA cross-border trucking dispute to be top of President Calderon’s list, but it will be up for discussion.

To recap, briefly: In the North American Free Trade Agreement, the United States signed on to allow cross-border trucking. As long as they meet U.S. safety and driver standards, Mexican and Canadian trucks under NAFTA should be able to cross the U.S. border, drop cargo and return home with cargo. They can’t engage in domestic deliveries. U.S. trucks are supposed to have the same rights. However, while this is in place between U.S. and Canada, implementation has been blocked for years between the U.S. and Mexico. Mexico won a NAFTA dispute settlement years ago, but declined to impose the retaliatory tariffs allowed by that process.

Until two years ago, that is, when Congress ended a pilot program for cross-border trucking and President Obama signed off on it. As a result of this, Mexico imposed retaliatory tariffs on billions of dollars worth of U.S. manufactured and agricultural exports. It has been nearly two years since this happened, and the Obama Administration has only very recently (January 2011) issued a “Concept Document” that lays out a foundation for discussions on re-establishing cross-border trucking. Little more has happened since that document was released, however, other than some “technical discussions.”

The Mexican government has indicated it is discussing the issue in good faith and that their U.S. counterparts are working hard. This is good news. However, the tariffs remain in place, harming American manufacturers who cannot ship their products to one of their largest markets without a massive markup that prices them out of the market. Many of these exporters are small & medium manufacturers – more than 90 percent of U.S. exporters to Mexico are SMMs. And waiting in the wings is a rotation of products on the retaliation list. We haven’t seen that list, but last time it was rotated, it put the bulls-eye on some major U.S. agricultural products, including pork and apples. Our bet is the next time it rotates, it’s going to focus squarely on manufactured goods instead. There’s not a lot of time left before we see this happen. We urge Secretary LaHood and his interagency team to buckle down and finish up their discussions. Tens of thousands of American jobs are at stake.

Mexican Trucks, an Update (But Not Much of One)

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Will Mexican President Felipe Calderon mention the cross-border trucking dispute at his 11 a.m. speech to a joint session of Congress? If he does, it will be the first specific reference to the issue we’ve seen from Mexico’s President and President Obama thsi week.

Yes, there are many, many important bilateral issues that President Obama and President Calderon needed to discuss —  the illegal drug trade, border violence, immigration. But it would have been nice if the word “trucking” had come up at least once, that is,  if there had been a straight-forward acknowledgement of the impact of the Mexican tariffs imposed on U.S. manufacturing and agricultural products in retaliation for the U.S. violation of NAFTA on cross-border trucking.

TruckingInfo.com, the website of the Heavy Duty Trucking Magazine, reported:

Although observers had widely expected the issue of cross-border trucking to be addressed this week during Mexican President Felipe Calderon’s visit to Washington, D.C., the issue was only alluded to in remarks and statements by Calderon and President Obama following yesterday’s meetings.

Instead, immigration reform and Mexico’s battle against drug gangs seemed to dominate.

Presidents Obama and Calderon issued a joint statement after their meeting Wednesday that did not specifically mention cross-border trucking but did talk about the importance of “creating a border for the Twenty-First Century” and to look at ways to “facilitate the secure, efficient, and rapid flows of goods and people and reduce the costs of doing business between our two countries.”

The Washington Times reported in the last paragraph of its story:

While the leaders alluded to ongoing trade disputes – such as the U.S. refusal to allow Mexican trucks on American roads, despite the North American Free Trade Agreement – no resolution was announced. Instead, they promised to continue to work through economic sticking points.

Businesses have closed and U.S. exporters have lost market share in the 13 months since Mexico imposed tariffs on U.S. products — $2.4 billion worth of products. Before you can solve this problem, you need to acknowledge it as a priority. So far, that hasn’t happened during President Calderon’s state visit.

Stuck in Neutral on Mexican Trucking

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Mexican President Felipe Calderon is in town today on a state visit. He’ll bring a full slate of issues to discuss with President Obama. One expects he’ll raise the issue of Mexican trucking yet again, with hopes that someone senior in the Administration will provide more details on how we’re going to find resolution on it and remove the pernicious retaliatory tariffs that Mexico has (entirely within their rights under NAFTA, mind you) put on $2.4 billion worth of U.S. exports, the overwhelming majority on manufactured goods.

However, as noted earlier this week in this blog, despite repeated assurances by Transportation Secretary LaHood and other senior officials that some kind of proposed solution that will make everyone happy is imminent, we don’t expect to see any major breakthrough during President Calderon’s visit.

An earlier blog post charted Transportation Secretary LaHood’s exchanges with Sen. Patty Murray (D-WA) earlier this month and in March, where he told her that a proposal was “closer than soon” to being shared with Congress. We’ve heard that before.

According to Inside U.S. Trade [subscription], U.S. Trade Representative Kirk yesterday “expressed doubt that there would be a concrete U.S. proposal on solving the trucking dispute this week. He told reporters after a speech that he did not know if there would be a “deal” on trucking this week. “But I do know that [Transportation] Secretary Ray LaHood continues with work with Congress and others to see if we can find a way forward, ” he said.

And then, yesterday at a White House press briefing, we had this less-than-reassuring exchange:

Q: You mentioned the four meetings that the two Presidents have had. At each of those President Obama has pledged to resolve the trucking issue in accordance with the NAFTA treaty. Can you update us on what progress has been made, and just talk more generally about the trade issues that will be at the summit?

SENIOR ADMINSTRATION OFFICIAL: Certainly. And as I noted, kind of the economic competitiveness and mutual economic growth are things that we very much expect to discuss — the President discuss with President Calderón and the two teams to have an opportunity to exchange views and see how we can work together to reach a goal that both Presidents have very clearly laid out in their own countries to revitalize economic vitality and job creation in both countries. Read More

Mexican Trucks Must Be on the Agenda This Week

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Excruciatingly difficult political issues will be at the forefront when Mexican President Felipe Calderon comes to Washington this week, notably the murderous drug wars and the continued flow of illegal aliens from Mexico entering the United States. We hope the near-intractable does not become an excuse for inaction on the achievable — a resolution of the cross-border trucking issue, which prompted Mexico to impose retaliatory tariffs on U.S. exports of manufactured goods and agricultural products.

The New York Times reduces the dispute to a single reference in its preview, “Mexican Leader to Visit U.S. as Woes Mount“:

Though the two governments are at odds on a variety of issues, including the immigration crackdown and a dispute over allowing Mexican trucks to enter the United States, relations between Mr. Calderón and Mr. Obama are close, say aides on both sides. The state dinner that Mr. Obama will hold for Mr. Calderón on Wednesday is evidence, since such events have been rare in the Obama presidency.

Being compadres is nice, but it’s no substitute for action. As The Capital Press, a West Coast agriculture weekly and website editorialized in April, “Obama must back talk with action.” The editorial reports startling news that warrants wider circulation:

Last month ConAgra shut down its french fry plant in Prosser, Wash. It said the 20 percent tariff Mexico slapped on frozen fries has greatly reduced demand for the plant’s output. The Washington Potato Commission said the tariff has cost the potato industry $15 million in sales. California grape shippers say they’ve lost 70 percent of their Mexican business in the 12 months since the tariffs have been in place. Growers of impacted goods across the West say they have either lost sales entirely or have been forced to discount their price to account for the tariff.

Although the administration promised swift action to rectify the impasse, 13 months have passed without any tangible results or any indication of what that action might be. Growers and processors in California, Oregon, Washington and Idaho are literally paying the freight to keep the Teamsters happy.

As the NAM’s Doug Goudie pointed out in his post on Monday, about two-thirds of the $2.4 billion in U.S. exports being affected by Mexico’s retaliatory are manufactured goods.

Cross-Border Trucking: The ‘Soon’ Can’t Come Soon Enough

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Reuters, “US to announce Mexico trucking plan soon-LaHood“:

WASHINGTON, May 6 (Reuters) – President Barack Obama’s adminstration will soon announce its plan to reopen the U.S. border to Mexican trucks and end a dispute that prompted Mexico to slap duties last year on $2.4 billion worth of U.S. goods, a top U.S. official said on Thursday.

“President Obama’s team has worked very hard to put a proposal together. We will be announcing it very soon,” U.S. Transportation Secretary Ray LaHood told lawmakers.

Truckinginfo.com has a more detailed report, including the pressure put on LaHood by Sen. Patty Murrray (D-WA); Washington state’s fruit growers have suffered a major hit to their sales from Mexico’s retaliatory tariffs. From “LaHood: Announcement on Mexico Truck Proposal Is ‘Closer Than Soon'”:

“Back in March, I urged you and the administration to move quickly to craft a plan to resume cross-border trucking with Mexico in a way that would address the safety concerns raised during the pilot and end the tariffs imposed by the Mexican government,” Murray said during Thursday’s hearing.

Murray wanted to make sure the proposal was really near this time around, interrupting LaHood with, “Sooner than soon?” He responded saying, “It is closer than soon.”

A NAFTA dispute panel found that the United States violated the North American Free Trade Agreement when it failed to implement a cross-border trucking program meant to ease the movement of products between Mexico and the United States. Mexico responded in March 2009 by announcing $2.4 billion of tariffs affecting products, Reuters reported, including sunglasses, toilet paper, pet food, ornaments, soy sauce, Christmas trees and produce such as strawberries, pears and onions.

More on the U.S.-Mexican Truck Dispute, Retaliatory Tariffs

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A lot of news coverage of the U.S.-Mexican truck issue a year after Mexico imposed retaliatory tariffs against U.S. farm and manufactured goods:

The Journal piece is based on the Q&A from U.S. Trade Representative Ron Kirk after his speech at the National Press Club Tuesday:

WASHINGTON—The Obama Administration’s top trade negotiator said the U.S. was working quickly to resolve a damaging trade spat with Mexico, one of several obstacles to the president’s goal of doubling U.S. exports within five years. 

“We understand the sense of urgency,” said U.S. Trade Representative Ron Kirk after a speech at the National Press Club.

It has been one year since Mexico imposed the retaliatory tariffs, so somewhere along the line that sense of urgency has been lost.

Ambassador Kirk’s prepared remarks did not add anything to his testimony last week on the Administration’s trade agenda, but that’s understandable. President Obama speaks at the Export-Import Bank’s annual conference on Thursday, and you wouldn’t want to overforeshadow your boss.

President Obama Says Solution Coming to Mexican Truck Flap

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Bloomberg, “Obama Promises Calderon Solution to U.S.-Mexico Trucking Spat“:

Aug. 10 (Bloomberg) — President Barack Obama told his Mexican counterpart Felipe Calderon that he is committed to resolving a dispute over truck access to U.S. highways.

Obama said he will also address safety concerns about the trucks raised by the U.S. Congress, an administration official said after the two leaders met in Guadalajara yesterday at a summit of North American leaders. Calderon told Obama that the dispute has hurt trade, raised consumer costs and reduced job creation, according to a statement from his press office.

See also BBC News, “Border ban angers Mexico truckers.”

From Trucks to ‘Low-Carbon’ Fuel, Trade Barriers

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Missing from U.S. Trade Rep Ron Kirk’s admirable speech Thursday (see posts here and here) expressing the Obama Administration support of expanded trade was any mention of the Mexican truck controversy, i.e., the NAFTA-violating provision in the stimulus bill that effectively ended a cross-border trucking program. In response, Mexico slapped duties on 90-plus U.S. products, especially consumer and agricultural products. Here’s the latest consequence, as reported in the Green Bay Press-Gazette, “Mexican tariffs impede paper company exports.”

You can only address so many issues in a speech, and in any case, Kirk’s remarks emphasizing the importance of enforcing trade agreements were relevant. The United States should indeed aggressively address violations of trade agreements through established processes and authorities. As a country that generally embraces trade, those procedures will tend to favor the United States.

But not always. We see that California Gov. Arnold Schwarzenegger is trumpeting yet another market-distorting, cost-adding environmental regulation, the low-carbon fuels standard. As AP reports, the Governor expressed utopiangastic pleasure at the California Air Resources Board’s decision:

Gov. Arnold Schwarzenegger said the rule would “reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure.”

Sure. Just like all the other excessive environmental rules adopted over the past decade in California. And how’s California doing?

Then there is the trade angle. The state regulations have an obvious and disproportionate impact on fuels derived from Alberta’s oilsands, which require additional energy to process. From The Los Angeles Times: “Canada’s consul general in San Francisco charged that the rule discriminates against oil from Alberta tar sands. ”

Canada is the No. 1 supplier of foreign crude to the United States, and now California is declaring its own (non-tariff) trade (barrier) war against those imports. But just because they’re not tariffs or quotas doesn’t make the regulations any less a servant of the protectionist cause — especially since they represent unilateral state action.

And what form might retaliation take, a year or two down the road? The new Mexican tariffs hammered California farm products. That could look like a smart strategy to the Canadians.

Violate NAFTA by Banning Mexican Trucks, and Pears Rot

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From The Capital Press, Salem (Ore.), “Mexico tariffs freeze pears“:

Exports of Northwest pears to Mexico have ground to a halt because of a new tariff.

Mexico last week imposed tariffs of 20 percent on pears, cherries, apricots, Christmas trees, frozen potatoes and other products. The tariffs are in retaliation for the U.S. ending a pilot program that allowed some Mexican trucks to transport goods in the U.S. as part of the North American Free Trade Agreement.

The American Farm Bureau has called on President Obama to fix the problem:

Expressing disappointment in Congress’ decision …to end the Transportation Department’s Cross Border Trucking Pilot Program, AFBF President Bob Stallman said Mexico has already responded by imposing $2.4 billion in trade retaliation.

“This action by Congress has come at a cost to U.S. agriculture and our exports to one of our top markets,” Stallman said. “We urge you to find a resolution that will honor our obligations under NAFTA, eliminating any cause for Mexico to halt U.S. trade.”

On Trucks, Tariffs and Trade Wars — and Congrats, Ron Kirk!

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The Oregonian, “Mexico’s new tariffs could cost Oregon millions

Mexico, angered by a ban on its trucks entering the United States, slapped tariffs on 90 U.S. products — a move effective today that could cost Oregon exporters tens of millions of dollars.

The duties include 20 percent tariffs on Christmas trees, pears and frozen potatoes, all of which Oregon sells to Mexico. A Mexican official confirmed his government chose the $2.4 billion worth of products partly to target states with powerful Democratic politicians….[snip]

“The vote was to save jobs for the unions, but it’s going to cause problems for several other industries,” said Bill Brewer, executive director of the Oregon Potato Commission.

He said the United States could lose its entire $80 million in annual french-fry exports to Mexico, for example, because Canadian competitors won’t have to pay $16 million in tariffs.

Exports of fresh grapes get hit the hardest (45 percent), and as the Oregonian reports, the focus is on agricultural products. But there are still plenty of manufactured goods that will suffer from the new tariffs. As Bloomberg reports, Procter & Gamble is assessing the impact on its household products like shampoos and deodorants.

The National Association of Manufacturers in Washington sent a note to members asking them to identify any impact.

“We need our members’ input to know how you will be affected by these new tariffs,” the memo said. “The NAM will be working with the administration and Congress to try to resolve this dispute quickly.”

All this said, it would be a mistake to say a trade war is here or on its way. Many trade observers say Mexico was relatively restrained, and the Obama Administration has been conciliatory on the Mexican truck issue, saying they want to work with the Mexican government to resolve the conflict. President Obama is apparently traveling to Mexico next month (CNN reports), which is an important diplomatic gesture.

So welcome to the post of U.S. Trade Representative, Ambassador Ron Kirk. The former mayor of Dallas has many things to work on.

Dallas Morning News, “Kirk easily confirmed as trade rep, now faces pressing challenges“:

We all know this must be solved,” said Sen. Kay Bailey Hutchison, R-Texas, who strongly supported the nomination. “I will say that the person who understands it best is Ron Kirk. He lives in Texas. He knows how important free trade is with Mexico.”