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.

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.

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.

The NAM applauds today’s announcement that the U.S. Trade Representative (USTR) is seeking to improve how trade policy can bolster the export opportunities of small and medium-sized enterprises (SMEs). As SMEs account for one-third of all U.S. exports, this is a very important step on the part of USTR. The NAM represents thousands of SME exporters and looks forward to working with USTR, Commerce, and other agencies on this very welcome initiative.

SMEs already benefit greatly from U.S. trade policy. For example, SMEs account for 95 percent of all U.S. exporters to NAFTA, and ship an average per company of $630,000 a year to that market – pretty important sales to smaller companies. And SMEs account for 44 percent of U.S. exports to the nations of CAFTA — averaging $440,000 per company.

However, while SMEs benefit strongly from Free Trade Agreements and multilateral tariff-cutting negotiations, some aspects of trade policy bear more heavily on SMEs than large exporters. For example, complex and confusing rules of origin (where a product is produced) and labeling requirements are extremely difficult to comply with for small firms. Different foreign product standards and costly testing and certification requirements can pose insurmountable obstacles for some smaller firms. Focusing new trade policy initiatives on these obstacles in addition to continued market opening could really boost smaller company exports.

USTR’s request that the International Trade Commission examine export obstacles and opportunities is a great next step. Expanded policy attention to the particular export challenges faced by SMEs can pay big dividends, particularly if coupled with expanded export promotion services to get the job done. The NAM thinks that doubling smaller company exports would be a great goal, adding over $300 billion to U.S. exports, and lots of high-paying jobs.

From The Globe and Mail, Toronto, noting PM Harper’s meeting with congressional leaders on the Buy American provisions in the stimulus bill that provoked Canadian responses and hurt companies on both sides of the border, “PM prepares to lobby U.S. Congress.”

Canadian prime ministers troop to the White House every few years, but rarely lobby the congressional leadership who control matters key to Canada’s interests – such as inserting Buy American clauses into stimulus-spending bills. Mr. Harper meets Mr. Obama for less than an hour Wednesday, but will hold two sessions Thursday with the top Democrats and Republicans in both the House and Senate.

“In the American system, particularly when it comes to issues of trade and protectionism, often our bigger challenges are in Congress, as opposed to the administration,” Mr. Harper said in an interview with CTV News before he left for Washington.

“So far the administration has responded quite positively to our offers and our attempts to deal with this. But it may be the case that the administration alone can’t deal with it. That’s something we’ll have to gauge on this trip.”

The prime minister will also talk about the move by some in Congress to punish Canada for developing its oil sands in northern Alberta. Environmental groups are engaging in protests and stunts against PM Harper’s visit, agitating against U.S. energy security. See SecureOurFuel.org’s commentary, “Greenpeace’s War on Reality.” Key excerpt:

of PetroChina’s involvement (financial and otherwise) in the oil sands eliminated all doubt, if any remained, that even if U.S. policymakers end our unique relationship on energy with Canada, those resources will continue to be produced for, sold to and used by millions (billions?) of grateful energy consumers in Asia – impacting America’s economic and strategic position, but doing nothing to limit the emission of carbon dioxide (in fact, according to one respected study, emissions may actually increase under an LCFS).

UPDATEHow ‘Buy American’ Can Hurt U.S. Firms“:

Mr. Pokorsky runs Aquarius Technologies Inc., a company in Port Washington, Wis., that makes equipment to treat sewage. The stimulus plan earmarks some $6 billion for municipal wastewater projects that are right in his company’s sweet spot.

But the bill’s Buy American provisions — meant to give U.S. companies a leg up on foreign competition — are causing Aquarius and other U.S. companies a lot of grief with both suppliers and clients in Canada.

Protectionism invites retaliation invites further protectionism invites further …

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. ”