Mexico's punitive tariffs raise stakes on US trucking dispute

Mexico says it will place tariffs on 90 US agricultural and industrial products valued at $2.4 billion.

MEXICO CITY – By slapping punitive tariffs on 90 products from the US, Mexico has followed up on threats to retaliate after the termination of a cross-border shipping program.

In doing so, Mexico is simultaneously raising the stakes in the decade-long dispute and creating a diplomatic stumbling block for President Obama’s new administration.

“It is a violation of the North American Free Trade Agreement, a case of protectionism, at a time when the Obama administration is messaging to the rest of the world not to succumb to the temptations of protectionism as a way to trigger a recovery,” said Armand Peschard-Sverdup, a Mexico expert with the Center for Strategic and International Studies in Washington.

“It’s kind of mixed messaging,” he said. “It’s the equivalent of ‘do as I say, not as I do.’ ”

In a statement released late Monday, Mexican Commerce Minister Gerardo Ruiz Mateos said the products – agricultural and industrial goods – come from 40 different US states and their total commercial value in 2007 was $2.4 billion. The products were not further identified in the statement.

The tariffs are allowed under NAFTA, since the US has not honored its requirement under the treaty to allow Mexican trucks to operate on US highways.

“In moments of economic crisis, when we should avoid protectionism at all costs, the US decision goes the other way and sends a negative signal to Mexico and the rest of the world,” Mr. Ruiz said in the statement.

A $410 billion spending bill approved by US lawmakers and signed by President Obama last week explicitly withdraws funding for a pilot program that gave some Mexican trucking companies the right to ship goods beyond the border zone and to their final US market (click here for the Monitor's story on the move). Some US companies were also allowed to do the same in the opposite direction.

The Mexican Commerce Ministry is expected this week to publish a list of the specific American products affected by the tariffs. Staples such as rice and wheat are not expected to face new duties. Ruiz said the ministry selected goods that would not affect the costs of basic essentials for Mexican consumers.

The tariffs come as representatives of the Obama administration say they have recommended that the office of the US Trade Representative work with transportation officials and lawmakers to come up with a new trucking program. In a radio interview Tuesday morning, Ruiz said he plans to meet with US officials soon to discuss the issue.

Mr. Peschard-Sverdup said the dispute was “inadvertently causing a bumpy start” for the Obama administration in its relationship with Mexico.

Allowing Mexican trucks to operate in the US interior would reduce shipping times and costs by eliminating the process of changing trucks at the border, experts say. However, opponents say Mexican trucks are unsafe and giving them access to the US would undermine US jobs.

Mexican trucks performed well in inspections under the pilot program, which went into effect in 2007. However, only small numbers of vehicles participated in the program.

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