Trade Dispute Flares Between U.S., Mexico Mexico says it will impose tariffs on a broad range of American products in response to the cancellation of an American program that allowed Mexican trucks to transport goods throughout the U.S. One expert says he doubts Mexico wants to stoke a trade war.
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Trade Dispute Flares Between U.S., Mexico

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Trade Dispute Flares Between U.S., Mexico

Trade Dispute Flares Between U.S., Mexico

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


And I'm Melissa Block.

If there's one thing that just about every economist agrees on right now, it's this: Protectionism, on the rise in this global downturn, is a bad thing and ought to be avoided. Yet that's exactly what's happening now between the U.S. and Mexico. The first shot in this trade skirmish was fired last week by the U.S. Congress.

It shut down a program under which Mexican trucks were allowed on U.S. highways. And yesterday, Mexico retaliated, saying it would impose tariffs on a variety of U.S. products entering Mexico.

NPR's Tom Gjelten reports.

TOM GJELTEN: The issue of Mexican trucks on U.S. highways goes back to the signing of the North American Free Trade Agreement, NAFTA, in 1994. Provisions allowing U.S. and Mexican trucks to operate across the border was part of NAFTA, but from the beginning, that provision was vigorously opposed by the Teamsters union, which represents U.S. truck drivers.

The Teamsters insisted Mexican trucks weren't safe. Then-Transportation Secretary Frederico Pena went to the border to investigate, and reported back to the Clinton White House that he saw no reason to block Mexican trucks. But the U.S. trade representative, Mickey Kanter, after hearing from the Teamsters, intervened and got the White House to suspend the trucking provision.

Mr. RICHARD FEINBERG (Latin America Specialist, Clinton Administration): I was very distressed because I thought this was an integral part of the agreement.

GJELTEN: Richard Feinberg was the Latin America specialist on the White House staff, and had spearheaded Clinton administration efforts to promote NAFTA.

Mr. FEINBERG: I remember that night, running around looking for other senior policymakers in the area of international economics. They all agreed with me that this was very lamentable. But they said, well, Richard, that's the reality of domestic politics and the way it impinges on international economics. Lesson learned.

GJELTEN: The provision was put on hold. In 2007, the Bush administration was finally able to implement a pilot program under which Mexican trucks could cross the border, provided safety standards were met. According to the latest figures from the Transportation Department, U.S. trucks are now more likely than Mexican trucks to be taken off U.S. highways for safety violations.

But Congress killed the pilot program last week at the urging of the Teamsters union and their supporters. For the Obama administration, the issue set its commitment to free trade against its commitment to organized labor. White House spokesman Robert Gibbs chose his words yesterday very carefully.

Mr. ROBERT GIBBS (White House Spokesman): Congress has opposed the project in the past because of concerns about the process that led to the program's establishment and its operation. The administration recognizes these concerns. The president has tasked the Department of Transportation…

GJELTEN: Gibbs went on to say that the Obama administration will now work with Congress and the Mexican government to come up with yet another way to allow Mexican trucks to operate safely on U.S. highways. But the Mexican government upped the ante yesterday by announcing it will impose tariffs on about $2.4 billion worth of exports from 40 U.S. states.

Claudio Loser, of the Inter-American Dialogue, says he doubts the Mexican government really wants to start a trade war.

Mr. CLAUDIO LOSER (Inter-American Dialogue): It is more saying, look, if you want to hurt us, we can hurt you the same way. And you have to understand that Mexico is an important trading partner, and better sit down and negotiate.

GJELTEN: Still, the dispute shows how sensitive trade issues are right now, given the precipitous job losses in the United States - as in other countries. Senator John McCain, who vigorously advocated the free-trade cause during the presidential campaign, was quick to criticize President Obama for bowing to special interests and closing the border to Mexican trucks.

Senator JOHN MCCAIN (Republican, Arizona): What the president is sending, is a message to the world that protectionism is on the rise in America. That is a -history shows us - is a very bad core policy to pursue.

GJELTEN: The Obama administration would agree with that last point, but opposing protectionism in this time of economic stress won't be easy.

Tom Gjelten, NPR News, Washington.

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