Though President Obama went to Mexico this week to discuss the swine flu epidemic with Mexican President Felipe Calderon, the two leaders discussed the trade dispute over the US Congress’ ban of a trucking program that would have allowed Mexican origin trucks access to US roads. According to NAFTA, Mexican trucks should be able to operate in the United States, as US trucks and Canadian trucks already do in Mexico.
But Congress failed to renew a pilot program earlier this year allowing Mexican trucks into the US. President Calderon told Obama yesterday that the dispute has harmed job creation efforts in Mexico as well as increase consumer costs and harm trade. The US Teamsters Union made the claim that Mexican trucks were not as safe (American and Canadian trucks are allowed to cross the border into Mexico) but a US Transport study confirmed the Mexican trucks actually had a better safety record than their US counterparts as we previously reported.
The ban on Mexican trucks into the US forced Mexico to take retaliatory action by imposing tariffs on a very broad range of goods impacting companies as diverse as Proctor & Gamble and Caterpillar. The ban is in effect another form of protectionism. Mexico responded tit-for-tat by imposing the tariffs.
80% of Mexican goods are exported to the US. Mexico is the US’s third largest trading partner after Canada and China. Besides value-added parts such as fabrications, Mexico is a key source of a range of copper products, steel, stainless steel and precious metals. We’ll keep readers posted on any developments.