Following up Monday’s announcement that the Mexican government would be “carousel-ing” some of the products targeted for retaliation under the cross-border trucking case, the official revised list was published this morning – and the new tariffs will take effect later this week.

The total value of the exports targeted by these tariffs is more than $2 billion in 2009 – which, you will note, was one of the worst years for American exports in a long time, given the impact of the recession. Based on 2008 figures, the value would be more than $2.5 billion.

In this spreadsheet we have highlighted the new products, the associated dollar value of Mexico’s imports from the U.S. for 2009, and listed the tariff percentage.

The biggest impact comes in new agricultural and processed food products. Manufacturing in America embraces many different sectors of production, and one of the largest and most important is the food processing industry. Here, we have seen the Mexican government impose tariffs of 10-20 percent on products like chocolate, ketchup, chewing gum and cheese — all products of the manufacturing sector, made in American factories by American workers.

At the same time, we see new tariffs imposed on other manufactured goods, including industrial polishes, adhesives, trench diggers, rubber gloves, floor coverings, stainless steel containers, and gas masks.

While the NAM is pleased to see a number of industrial products removed from the revised list – including carpets, telephones, metal furniture, and various paper products – the list of manufactured goods facing tariffs as a result of the Obama Administration’s lack of progress on resolving the cross-border trucking dispute remains long. Mexican school children will be paying more for their education this fall, given that printed exercise books, paints, ballpoint pens and pencils are on the list, facing 15 percent duties. Also still on the list are key home products like refrigerators, coffeemakers and dishwashers; consumer goods like toothpaste, deodorants, aftershave, and suntan lotion (and toilet paper); home furnishing goods including curtain rods and desks, and industrial goods including gas filtering machines.

All in all, it’s a cornucopia of American-made products facing punitive tariffs in Mexico this week. Not just manufacturing but farmers will feel the pain as well – the significant addition of pork, apples, oranges, sweet corn and grapefruits total well over $700 million in U.S. exports. But manufactured goods are hit, and hit hard. And hit just as hard are the American factory workers who make these products – most of which have a significant export market in Mexico, our second largest trading partner.

It’s past time to fix this problem and get our goods moving back over the border that we made duty-free in 1994 with NAFTA.

From Bloomberg, “Mexico Puts Tariffs on Some U.S. Pork Cuts in Truck Program Retaliation“:

Mexico will impose import tariffs on some U.S. pork cuts, ketchup, cheeses, sweetcorn and some fruits because of the U.S. government’s failure to restore a program allowing Mexican trucks to operate north of the border, the nation’s official gazette said.

The list includes a tariff of 5 percent on some cuts of pork and as much as 25 percent on fresh white cheese, according to the notice. Onions, apples, pears, oranges, cherries, soy sauce, mineral water and sunglasses are also on the list.

Mexico’s official gazette lists all the products in Spanish. Media reports focus on the agricultural and retail products because consumers/readers can easily grasp the impact. The economic on manufactured goods could be as great or greater, however. Here’s Google’s translation of part of the list, including the percentage tariffs applied. Most of it reflects the original list of products announced in March 2009.

 We note the addition of heavy machinery, such as trenchers (8429.59.01), hit with a 15 percent tariff.  That’s a big ticket item which other countries such as Canada are more than eager to supply.

Surprisingly, this week’s hot issue of retaliatory tariffs imposed by Mexico against U.S. farmers and manufacturers appears not to have been mentioned during the President’s trip to Seattle on Tuesday. At least the issue does not appear in any of the public comments.

Washington State agricultural producers have lost millions of dollars worth of sales because of Mexico’s tariffs against U.S. products imposed in retaliation for U.S. refusal to establish the cross-border trucking program required by NAFTA. Sen. Patty Murray (D-WA), for whom President Obama raised campaign funds on Tuesday, is leading the Congressional call for resolving the dispute.

Commerce Secretary Gary Locke, the former Governor of Washington, was also on hand.

But nothing in any of the public comments we see.

• Remarks by the President at Fundraiser for Senator Patty Murray
• Remarks by the President at Luncheon for Senator Patty Murray
• Remarks by the President After Roundtable With Local Business Leaders in Seattle, Washington

Well, maybe the issue arose in private conversations.

Earlier Shopfloor.org posts.

The President is expected to highlight export issues in Seattle today when he speaks with small business owners at 11:40 a.m. and then makes a statement to the press. (White House schedule.)

We’d be very surprised if he does not comment on Mexico’s announcement Monday of retaliatory tariffs being imposed on additional U.S. products because the United States is violating NAFTA provisions requiring regulated cross-border trucking.

The issue is especially timely because the President follows his meeting with business owners by attending a campaign fundraiser with Sen. Patty Murray (D-WA), one of the most vocal critics of U.S. inaction on the issue. Murray has demanded a solution to the problem by Oct. 1.

The Mexican government has imposed its tariffs with a keen political sense, hitting U.S. farm products in states like Washington, Idaho and California, and many manufactured goods — obviously the major concern of the National Association of Manufacturers. News accounts today highlight the additional tariffs on pork and pork products. From The Des Moines Register, “Irritated Mexico increases tariffs on U.S. pork“:

Mexico added pork to a list of 99 U.S. products on which it is raising tariffs under the North American Free Trade Agreement, the National Pork Producers Council said Monday.

“Mexico’s retaliation against U.S. pork will have negative economic consequences for America’s pork producers,” said Sam Carney, a producer from Adair who is president of the pork council. “We are extremely disappointed that our top volume export market has taken this action, but we’re more disappointed that the United States is not living up to its trade obligations.”

The actual list of affected products won’t be known until its published in the government’s Official Gazette, but Bloomberg reports: “Fifty-four of the products that will be subject to tariffs will be agricultural and the rest will be manufactured goods, said the Mexican official who can’t be identified.

U.S. Trade Representative Ron Kirk expressed disappointment in a statement. The gist: We’re working on it.

(continue reading…)

Mexico’s minister for the economy, Bruno Ferrari, has just announced the Mexican government will be adding to its list of U.S. products subject to retaliatory tariffs resulting from the United States’ failure to address the cross-border trucking dispute. While the exact products and changes aren’t official and won’t be for several days, the basic issue here is unchanged: The United States has violated the terms of a trade agreement, NAFTA, and thousands of U.S. manufacturing jobs are at risk because the Administration and Congress won’t take the necessary steps to put us in compliance.

President Obama and President Calderon met back in May and discussed this issue. I am certain at that time that President Calderon told Mr. Obama that, if this issue were not resolved in a timely fashion, additional tariff retaliation would be forthcoming. Now, almost two months later, we see that the retaliation is here. More manufacturing and farm products will be added to the list, which already impacts billions in dollars in U.S. exports. Some products will come also off the list — but the very fact that we are facing retaliation on American manufacturing firms and their exports is unacceptable. This issue can be resolved through careful cooperation between the Administration and Congress, and between the United States and Mexico. Transportation Secretary LaHood told Sen. Patty Murray (D-WA) more than two months ago that a solution was “closer than soon.” The only thing “closer than soon” now is additional tariff retaliation on more U.S. manufacturing.

Some of those manufacturers have already shut down U.S. assembly lines and moved their production to Canada, Mexico or other countries – exporting jobs instead of products. Others are still paying the tariffs to maintain their market share in Mexico – money that could be far better spent on creating new jobs, increasing investment in their business, or expanding to other markets. Many of those manufacturers have indicated that, 15 months after the tariffs were first imposed, they will now begin to shut down U.S. production rather than continue to pay the tariffs –- so we can expect the pain to spread from their bottom line to the unemployment line.

It doesn’t have to be like this. There is no reason under the sun why we continue to face the tariff retaliation we’ve faced since 2009 — and certainly no reason for facing additional products being targeted. This new action should spur to Congress and the Administration to turn to negotiations and a solution as soon as the August recess ends. Manufacturing wants to double exports, increase jobs, and lead the economic recovery. Pursuing policies that do the opposite by leaving trade disputes unsettled are the wrong road to travel.

• CNNExpansión.com, “México ‘refuerza’ aranceles contra EU“
• Milenio, “Amplía México sanciones contra EU por violar TLC“

The Central-American Free Trade Agreement, or CAFTA, was signed into law five years ago today, August 2, 2005, (later expanded to include the Dominican Republic to become CAFTA-DR). Facing vicious opposition from labor, the anti-trade Global Trade Watch, and others, the agreement had passed Congress by just two votes. Opponents vilified the agreement, predicting it would hurt American manufacturing.

Global Trade Watch’s Lori Wallach, for instance, called CAFTA a “catastrophe”, “a moldering corpse waiting to be buried,” and confidently predicted U.S. deficits and job losses. The U.S. International Trade Commission, the National Association of Manufacturers and other responsible organizations, on the other hand, predicted the agreement would spur U.S. exports and result in significantly stronger growth.

The record shows how wrong Wallach and other trade detractors were. As is clearly shown in the inserted graph, far from greater deficits, the CAFTA-DR agreement has changed deficits to surpluses. In the years prior to CAFTA, American manufacturers ran deficits with the CAFTA countries averaging $1.1 billion a year. After CAFTA went into effect, those deficits quickly turned to surpluses that have averaged $3.5 billion a year.

The improvement in the trade balance with CAFTA-DR occurred because the dollar value of U.S. manufactured goods exports grew faster than imports. In the years prior to the agreement, U.S. manufactured goods exports to the region grew less than 5 percent a year. In the years immediately after the agreement, they soared almost 14 percent a year.  And even after the global trade collapse in 2009, manufactured goods exports to CAFTA-DR so far this year have boomed 30 percent, much faster than the 22 percent increase of U.S manufactured goods globally.

It is time for Lori Wallach to stop talking about a “failed CAFTA trade policy.”  The only thing that is failing here is her rhetoric.

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.

President Obama and President Calderon of Mexico released a joint statement after their meeting today, and they also held a media availability. The most direct reference we find to the cross-border trucking and tariffs issue came in the availability from President Calderon:

Together, we should increase our exporting capacity in a contest of growing competitiveness among different regions of the world.  We talked about the different obstacles that are there for complying with transportation obligations that have been established at NAFTA, a situation that impacts jobs, companies and consumers in Mexico and in the United States.  And we shall work in order to achieve a quick solution with a constructive, creative solution in the long term in this and many other areas. 

The joint statement also had this diplomatic language:

The Presidents agreed that safe, efficient, secure, and compatible transportation is a prerequisite for mutual economic growth.  They committed to continuing their countries’ cooperation in system planning, operational coordination, and technical cooperation in key modes of transportation.

So that’s it.

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. (continue reading…)

Mexican President Calderon arrives in Washington on a state visit this week. We expect he will raise an old and a very costly issue – the refusal of the United States to adhere to its obligations under the North American Free Trade Agreement and permit cross-border trucking. American manufacturers and farmers are facing retaliatory duties on $2.4 billion worth of products as a result of the termination of a pilot program that allowed Mexican trucks access to the United States, as we agreed to do in 1993 when NAFTA was signed.

The tariffs have been in place for 13 months. The Administration has been promising a fix for almost as long. American manufacturers continue to lose market share, pay higher duties and take a hit on their bottom line. Tens of thousands of jobs are at risk if policy is not changed and thousands have already been lost.

Recent press accounts have been filled with a sense of hope that the Obama Administration is “close” to announcing a proposal to resolve the issue – that we will “soon” see a plan. But we’ve heard this before.

The current hope for a resolution springs from comments at a May 6 Senate Transportation, Housing and Urban Development Appropriations Subcommittee hearing. Sen. Patty Murray (D-WA) urged Transportation Secretary Ray LaHood to resolve the trucking dispute with Mexico during the state visit of President Calderon.

The Senator’s questions focused on the agricultural aspects of the trade dispute, and while we certainly sympathize with Washington state farmers, the Mexican tariffs are hurting manufacturers across the country, in all 50 states – about two-thirds of the $2.4 billion in exports subjected to tariff retaliation are manufactured goods.

Here’s the start of her question (from her web site, where you can listen to the Q&A as well):

Mr. Secretary, I want to ask one last question about an issue I brought up with you the last time you were before this subcommittee: cross-border trucking with Mexico and the devastating effect of Mexican tariffs on Washington state farmers.

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.

You told this subcommittee that a resolution would be forthcoming “soon.”

According to press accounts, LaHood said the DOT, cabinet members and Obama’s administration had “worked very hard to put a proposal together we will be announcing it very soon.”

He said, in response to the Senator: “We will come to Capitol Hill and brief every senator that has an interest in what it says; get feedback. Our intention is, President Obama’s administration’s intent is to restart this program. It’s part of NAFTA. It needs to be restarted. We believe if it is restarted these tariffs will be lifted.”

The secretary said they are “very close to briefing you and other senators” when Murray interrupted him.

“Very close,” she asked. “Sooner than soon?”

“It is closer than soon,” LaHood responded. (continue reading…)