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:

• Houston Chronicle, “US working to resolve border trucking dispute“
• CNN International, “Mexico to US: Allow cross-border trucking“
• Reuters, ”Obama criticized for Mexico, Brazil sanctions“
• Consumer Electronics Association, “CEA Urges Reauthorization of US-Mexico Trucking Program“
• The Hill, “War over fries“
• American Frozen Food Institute, “American Frozen Food Institute Urges White House and Congress to Resolve …“
• Wall Street Journal, “Mexico Tops List of Trade Issues Facing White House“

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.

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.”

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?

• Los Angeles Times, “California unemployment rate reaches 11.2%“
• The Desert sun, “State leads nation in March layoffs“
• The Daily Sound, “Economists: things could be worse in SB County“

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.

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.”

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.”

An unofficial list of goods that the Mexican government has applied new tariffs on in retaliation to Congress passing and President Obama signing the omnibus appropriations bill that ended a Mexican cross-border trucking program.

Most of the charges range from 10 to 20 percent. The notable exception is 45 percent applied to fresh grapes.

Many, many manufactured goods are included in the list. For example:

• Manicure or pedicure preparations
• Shampoos
• Hair lacquers
• Other preparations for use on the hair
• Dentrifrices
• Filament nylon yarn used to clean between the teeth (dental floss)
• Other yarn used to clean between the teeth (dental floss)
• Other preparations for oral or dental hygiene, including denture fixative pastes and powder; in individual retail packages
• Pre‐shave, shaving or after‐shave preparations
• Personal deodorants and antiperspirants
• Tableware and kitchenware, of plastics
• Other household articles and toilet articles, of plastics
• Statuettes and other ornamental articles
• Self‐copy paper
• Toilet paper
• Notebooks (exercise books)
• Other printed books, brochures, leaflets and similar printed matter, whether or not in singles sheets
• Other trade advertising materials

Earlier posts:

• No Surprise: Mexico Slaps Tariffs on U.S. Goods Over Truck Dispute
• Just a Little Protectionism? Then Comes the Escalation
• Por Favor, Mexico: Reinventing the Border Truck Program

From Bloomberg:

March 18 (Bloomberg) — Mexico will apply tariffs of 10 percent to 45 percent on at least 90 products from the U.S. in retaliation for the U.S. scrapping a test program allowing Mexican trucks to deliver goods beyond a U.S. border zone.

The products include some fruit and vegetables, wine, juices and sunglasses, according to the online version of the State Gazette. Most tariffs are 10 percent to 20 percent, with unspecified fresh products subject to a 45 percent tariff. The tariffs, which will apply to $2.4 billion of goods, take effect tomorrow, Economy Minister Gerardo Ruiz Mateos said yesterday.

Talks to diffuse the first trade spat of President Barack Obama’s administration can’t begin until the U.S. has a Commerce Secretary, Ruiz Mateos said. Discussions to resolve the dispute will start once his counterpart is ratified, he said. Ruiz Mateos said that the trade dispute with the U.S. is hurting the region and giving an advantage to other parts of the world.

“We’re waiting to begin work,” Ruiz Mateos said. “Unfortunately, the U.S. Senate hasn’t designated our counterparts yet.”

The list of goods is here, in Spanish. We’ll post the English version as soon as it’s available. [UPDATE: Here it is.] Most do seem to be agricultural products, but there are plenty of manufactured goods too: “Rotuladores y marcadores con punta de fieltro u otra punta porosa.” Take that, Congress says to U.S. felt-tipped pen manufacturers.

Congress killed the border truck program in the omnibus appropriations bill, signed into law by President Obama.

Columnist Charles Krauthammer assessed the provisions in comments yesterday on Fox News:

There are over 6.5 million trucks in the United States. This program allows 98 Mexican trucks to roam among them. And over that, they are willing to risk a trade war with Mexico.

If you wanted to do protectionism, do it competently. Go the full Smoot-Hawley. But over 98 to enrage Mexico, to threaten to destroy NAFTA, and to show the world that the American Congress is willing to impose protectionism over trivialities at a time when the economy is hanging by a thread, where every other country is looking to see if American is going to turn protectionist.

In an editorial, the National Review notes exports to Mexico have already fallen 17.5 year-to-year, and, “The tariffs would deliver another crushing blow to exporters at the worst possible time. ”

AP, “Administration to reinvent Mexican truck program“:

WASHINGTON (AP) — The Obama administration will try to reinvent a program to allow Mexican trucks full access to U.S. highways.

An 18-month-old pilot program that allowed a few Mexican trucks beyond a border buffer zone died when President Barack Obama signed a sweeping $410 billion government spending bill on Wednesday. The bill barred spending on the pilot program.

A spokeswoman for the Office of the U.S. Trade Representative, Debbie Mesloh, said Obama has told the office to work with Congress, the Transportation and State departments and Mexican officials to come up with legislation to create “a new trucking project that will meet the legitimate concerns” of Congress and U.S. commitments under the North American Free Trade Agreement.

That statement presumes it was “legitimate concerns” of Congress that led to the program being killed. And presumes that you can reconcile those “concerns” with the U.S. NAFTA commitments.

But the braking force was organized labor, wasn’t it? Since the Teamsters are fundamentally opposed to NAFTA, there’s no reconciling to be had. And the United States adds more evidence to its reputation as being an unreliable trading partner.

(Hat tip: Brian Faughnan, who comments, “Mexico is within its treaty rights to retaliate, and they’re likely to begin the process before long. Without even addressing the issue, Obama has soured relations with one of our most important trading partners and energy suppliers.” Well, to be fair, the last in a long line of sour-ers.)

Daniel Griswold, trade expert at Cato, comments:

Buried in the $410 billion catch-all appropriations bill now before the U.S. Senate is a provision that would end a program that has allowed Mexican truck drivers to deliver goods to destinations inside the United States.

A provision in the original North American Free Trade Agreement of 1994 was supposed to allow U.S. and Mexican trucking companies to deliver goods in each other’s country. But opposition from the Teamsters union and old-fashioned prejudice against Mexicans has derailed implementation of the provision.

Prejudice is a strong word that implies dark motives behind populism and protectionism. Not sure it helps move the debate forward. “Anti-competition” is another, more identifiable critique. So is “unworthy, unreliable” negotiating partner.

The trouble with the anti-trucking, anti-trade policies being tacked onto an omnibus bill is that it undermines the clear intention of NAFTA and ancillary agreements (as explained by Griswold in this 2007 paper). Congress is sending this message to all potential trade partners (again): “We’ll sign an agreement, yes, but we’ll do everything to undermine its consistent application. So you’re an idiot to trust us.”

Now that’s leadership.

For the text of the provision, read below in the extended entry.