US secretary of transportation Ray LaHood shared a ‘concept document’ with Congress and the Mexican government on Thursday, which proposes allowing Mexican trucks into the US dependent on truck inspections and review of drivers’ records. The Mexican government has introduced tariffs of five to 25 percent on a range of 99 US products over the past two years in retaliation for a US block on Mexican cargo trucks crossing the border. A 20 percent tariff was applied last year to American chocolate and gum being shipped into Mexico, prompting an outcry from US confectioners.
President Obama said in August 2009 that he was committed to finding a solution.
The National Confectioners Association welcomed the move toward ending the dispute, saying that $45m worth of confectionery exports are subject to the tariffs despite US confectionery having “absolutely nothing to do with” the trucking issue.
NCA’s president Larry Graham said: “NCA urges members of Congress to support any reasonable new agreement so that US candy makers can grow exports in line with the Obama Administration’s goal of doubling exports in five years. Mexico represents an important market for our industry.”
Trading blows
In 1995, the US and Mexico, under the North American Free Trade Agreement (NAFTA), agreed to lift barriers on trucking goods from Mexico to the United States.
However, under pressure from labor groups citing environmental, road safety and competition concerns, the US has continued to block Mexican cargo trucks from crossing the border.
Mexico took the issue to a dispute resolution panel in 2001, which recommended that the US comply with the NAFTA accord and allow Mexican trucks to cross the border.
In 2009, the Mexican government applied tariffs to 89 US products in an effort to put pressure on Washington to honor its NAFTA obligations, and last year added ten more, bringing the total to 99 US goods, including chocolate and gum.
Other food items affected by the tariffs include a range of fruits, vegetables, nuts, seeds, juices, soups, sauces, cheeses, and pork products. The latter is especially significant as Mexico represents the United States’ largest export market by volume for pork products.
Pork exports hit
The National Pork Producers Council (NPPC) applauded the progress on the trade dispute, saying that US pork exports have dropped 11 percent since tariffs were introduced in August 2010. The council said it hopes the concept paper will open the door to quick progress and resolution.
NPPC president Sam Carney, a pork producer from Adair, Iowa said: “Every month that the trucking issue goes unresolved, we continue to lose market share in Mexico – one of our most important export markets.”
The transport department’s concept document is available online here.