Tag: retaliatory tariffs

Belated U.S.-Mexico Truck Deal Could Lift Tariffs, Boost Exports

President Obama and Mexican President Felipe Calderon announced a tentative agreements Thursday under which the United States would finally implement the cross-border trucking program required by U.S. signing of the North American Free Trade Agreement. The announcement is excellent news for U.S. farmers and manufacturerers whose products have suffered from retaliatory tarifs from Mexico.

As the National Association of Manufacturers’ Aric Newhouse said in a statement: “The United States is a global leader in ensuring enforcement of trade laws, and we need to lead by example – by coming into compliance with our NAFTA obligations on Mexican trucks. The NAM has led the effort in urging the Administration to reach an agreement to end these costly tariffs.”

Houston Chronicle and San Antonio Express News, “Deal would lift U.S. roadblock on Mexican trucks,” quotes two Texas business leaders talking about the positive, practical implications of the agreement.

“More than 15 years ago NAFTA was signed declaring free trade and removing obstructions to the flow of goods between Mexico and the United States,” Jeff Moseley, president and CEO of the Greater Houston Partnership, said in a statement. “With the compromise announced today, the full potential of NAFTA can come to fruition and Houston can hopefully grow its annual trade with Mexico currently at $16.2 billion.” …”We are pleased,” said Free Trade Alliance San Antonio president and CEO Kyle Burns. “It is unfortunate that it took billions of dollars in retaliatory tariffs to force the U.S. government into living up to its international obligations.

“We are hopeful that this latest program will lead to the successful conclusion of this issue, which should have been fully implemented in 2000. Mexico is showing good faith in our efforts. It is now up to the United States to follow through on our latest commitments and stop hiding behind safety concerns that are unfounded, as the initial pilot program proved.”

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

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.

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Cross-Border Trucking Plan Boosts Manufacturing Exports to Mexico

We can’t say the Mexican trucking dispute is over, but we can now say that, at last, the end appears to be in sight. Almost two years after Mexico imposed retaliatory tariffs on billions of dollars of American manufactured goods exports, the Obama Administration has released a long-awaited “Concept Document” that provides a foundation that, if it can be successfully turned into a mutually acceptable proposal, will lead to compliance with our NAFTA commitments and the removal of Mexico’s retaliatory tariffs on billions of dollars of U.S. exports.

While release of the interagency document is an excellent development and very good news, we are not out of the woods just yet. It will take substantial effort on the part of the Obama Administration and Congress to work through the concepts in this proposal and create a final agreement acceptable to all parties. Public comments will be solicited. And, of course, the Mexican government will need to be an integral part of any agreement. A solution will need to ensure that Mexican and American cross-border trucking takes place in a manner similar to the existing cross-border trucking that has existed between the United States and Canada. The good news is that a successful solution will speed commerce and increase productivity and efficiency in supply chains.

But only after a final agreement is reached and we are compliant with our NAFTA commitments will the tariffs be removed. And Mexico’s retaliatory tariffs have had an significant impact on a wide variety of industrial sectors across the entire country. For two years, manufacturers around the United States have faced these retaliatory tariffs on their exports to Mexico. As a result, our competitors from Canada, Latin America, China and elsewhere have had an opportunity to increase their market share in Mexico at our expense. We need to move swiftly toward a solution so the tariffs can be eliminated.

Still, we appreciate the efforts put forth by the Administration in its interagency process to develop and release this concept document. The proposal released today will form the basis on which discussions between the United States and Mexico (with input from Congress and a public comment period) will take place. We strongly encourage all parties involved to buckle up, buckle down and get moving. Every day that passes means unnecessary barriers to American exports remain in place.

Department of Transportation release, “U.S. Cross-Border Trucking Effort Emphasizes Safety and Efficiency

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The Impact of Mexican Tariffs on U.S. Manufacturing, Agriculture

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.

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U.S. Manufacturing Affected by Mexico’s Retaliatory Tariffs

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.

 

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In Seattle, a Topic Not Addressed: Cross-Border Trucking

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.

Well, maybe the issue arose in private conversations.

Earlier Shopfloor.org posts.

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Cross-Border Trucking: Mexico Retaliates with Tariffs on Pork

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…)

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Cross-Border Trucking: Manufacturers Face Additional Mexican Tariffs

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.

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

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.

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