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.