Mexico Bites Back

Responding to Congress' scrapping of a North American Free Trade Agreement obligation to let Mexican trucks enter the U.S., Mexico's government retaliated with $2.4 billion in tariffs on 89 U.S. goods that had gone to Mexico duty-free since 1994. The Mexicans made no bones about why they were doing it: If the U.S. won't honor the treaty it signed in 1993, then they won't either. Retaliation isn't something to cheer, but who didn't see it coming? The U.S. had promised to let Mexican trucks on the road by 2000, and still only had a pilot program as of 2003. When the U.S. Omnibus bill got rid of even that program, under which Mexican trucks passed all inspections and even outperformed U.S. trucks on safety, the result was a treaty not worth the paper it was printed on. With retaliation, the Mexicans were saying that if the U.S. intended to pick and choose what parts of the treaty it would follow, then they'd do the same. The Mexicans knew this was coming, too. They were ready. As a Mexican official told the Oregonian newspaper on Wednesday, Mexico targeted goods produced in districts represented by Congress' worst trade protectionists for tariffs. "The intention is to let the constituents know that it's important that the United States respects and abides by its international obligations," the anonymous Mexican official explained. House Speaker Nancy Pelosi, whose district is near California's vast table-grape producers, got the highest tariff hikes, as much as 45%...IBD

Mexico Tariffs Spare Ford, Tyson, Rile Potato Growers

Mexico spared Ford Motor Co. and Tyson Foods Co. from $2.4 billion in tariffs on U.S. imports that take effect today, deciding instead to target growers of potatoes, cherries and pears. Fruits and vegetables are the most common items on the list of 90 products hit with tariffs as Mexico retaliated against a U.S. decision to block Mexican trucks from traveling north of a commercial zone along the border. The choice may reflect a calculated move by the government of Mexican President Felipe Calderon to exert pressure on U.S. lawmakers to back off on the trucking decision, said Ed Gresser, a fellow at the Progressive Policy Institute in Washington and a former official at the U.S. Trade Representative’s office. “The agricultural constituencies are powerful and they go to Congress and say, ‘What are you doing to me?’” Gresser said in an interview. Potato growers alone could lose an annual market of $80 million, said John Keeling, chief executive of the National Potato Council in Washington. “This thing has to be fixed,” Keeling said. “It’s unconscionable that Congress let this happen.” Trade between the two countries totaled $368 billion in 2008, making Mexico the third-largest U.S. trading partner after Canada and China, according to the Commerce Department. The U.S. exported $11 billion of food and meat, and $63 billion of machinery, autos and transport equipment to Mexico last year. “I’m shocked that pork and beef are not in there,” said Timothy Keeler, a lawyer at Mayer Brown LLC in Washington and the chief of staff at the U.S. trade office until this year. Including them “would have sent political tremors,” he said...Bloomberg