FIRST MEETING: Presidents Felipe Calderon of Mexico and Barack Obama of the United States at their first meeting earlier this year. (Photo: Mexican President's Office).
Poll
Should the US respect NAFTA and open up the border to Mexico trucks?
Mexico is right to retaliate against the United States for its violation of NAFTA.
BY CHRONICLE EDITORS
President Barack Obama is facing a taste of his pre-election threats to redo the North American Free Trade Agreement (NAFTA). Only this time, it's Mexico that is restricting access for U.S. goods. Unlike Obama's threat, the Mexicans can do this with full backing in NAFTA.
The reason? The U.S. Congress decision last week to stop the temporary truck program initiated by the Bush Administration. "The decision shattered faint hopes for the expansion of such rights to a larger number of trucks, and terminated a measure that had provided some respite for ongoing bilateral trade tensions," IHS Global Insight analysts Marion Barbel and James Auger said in a commentary today. "Under the North American Free-Trade Agreement (NAFTA), truck access on both sides of the border should be fully opened."
DELAYED SINCE 1995
NAFTA called for the United States to permit Mexican trucks first in the border states in December 1995 and then throughout the country in January 2000. But due to opposition by U.S. unions and their backers on Capital Hill, the move was repeatedly delayed.
Although he had fought for getting NAFTA approved by the U.S. Congress, President Bill Clinton delayed the trucking provision, pointing to concerns about safety raised by the International Brotherhood of Teamstersunion. Mexico challenged the delay and in February 2001, a NAFTA arbitration panel ruled that the U.S. delay was illegal.
That same year the U.S. Congress approved legislation that required 22 safety regulations to be met before allowing trucks from Mexico to drive beyond the U.S. commercial zones. The following year, the Transportation Department certified that the safety requirements had, in fact, been met. However, the implementation was then delayed by a 2002 U.S. Ninth Circuit Court of Appeals ruling claiming that it first needed to do an environmental assessment. The U.S. Supreme Court ruled in June 2004 that no such assessment was necessary to comply.
Finally, in April 2007 the Bush Administration started a pilot program allowing a select group of Mexican cargo trucks to cross the border. The idea was to gradually expand the number rather than stop the program, as will happen now.
EXPENSIVE RESTRICTIONS
The move by the U.S. congress is a terrible blow to both Mexico's rights under NAFTA and the U.S. economy as it suffers the crisis. Restricting Mexican trucks free access to the United States costs consumers more than $400 million a year, the U.S. Department of Transportation has estimated.
Without free access, Mexican cargo will enter the United States under a cumbersome system that is both costly and time-consuming. The cargo can cross the border at special 25-mile commercial zones in California, Arizona, New Mexico, and Texas. However, as soon as they have crossed the border, they have to offload their cargo to a US truck that will then haul the shipments within the United States.
Today, as much as 80 percent of U.S.-Mexican trade is transported by truck, according to the U.S. Department of Transportation. Last year, U.S. trade with Mexico reached $367.5 billion. Of that Mexico's exports to the United States accounted for $215.9 billion, while our exports to the country reached $151.5 billion.
FORCING OBAMA'S HAND
The Mexico tariffs will force Obama to choose between respecting NAFTA and our close ally or pandering to protectionists.
"Obama has ... softened his language on trade since taking office, warning repeatedly against tit-for-tat protectionism in the midst of the economic crisis," the IHS Global Insight analysts say. "His administration has also said that it wants to move forward with bilateral free-trade deals that were previously stalled by Democrats in Congress. At the same time, the administration has run into international controversy over the "Buy American" clause in the fiscal stimulus package. Its position on free trade thus remains somewhat ambiguous; the current spat with Mexico should give a clearer picture of where it really stands."
President Obama has repeatedly stated his opposition against protectionism, as late as Saturday while meeting with Brazilian president Luiz Inácio Lula da Silva.
Respecting NAFTA's truck provision would be a good start.
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