crisis: Libre comercio?

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Mexico Strikes Back in Trade Spat


By GREG HITT, CHRISTOPHER CONKEY and JOSE DE CORDOBA

The Mexican government said Monday it would slap tariffs on 90 U.S. industrial and agricultural products, in a trade dispute that underscored the difficulties facing President Barack Obama as he tries to assure business and global allies that he favors free trade.

Mexico said the tariffs were in retaliation for the cancellation of a pilot program allowing Mexican trucks to transport cargo throughout the U.S.

Unions have for years fought to keep Mexican trucks off U.S. highways, despite longstanding agreements by the two countries to eventually allow their passage. Legislation killing the pilot program was included in a $410 billion spending bill Mr. Obama signed last week.

The White House responded Monday to the tariff threat with assurances that Mr. Obama would work with Congress to create a new cross-border trucking program that addresses safety concerns

BORDER BRAWL: A Mexican driver waited Monday for U.S. Customs to inspect his truck at Otay Mesa, Calif. Mexico said it would slap tariffs on U.S. goods in a dispute over Mexican truckers' access to American roads.
Sandy Huffaker for The Wall Street Journal


White House spokesman Robert Gibbs said U.S. and Mexican officials would work on legislation for a new plan "that will meet the legitimate concerns of Congress and our [North American Free Trade Agreement] commitments."

Mexico's Economy Minister Gerardo Ruiz Mateos said Monday the legislation signed by Mr. Obama was "wrong, protectionist, and clearly violates" the free- trade treaty signed by the U.S., Mexico and Canada in 1994. Mr. Ruiz Mateos said the ban protected U.S. truckers while hurting Mexico's ability to compete.

The Mexican government wouldn't say Monday exactly which products would be hit with tariffs but that the total value of the products was $2.4 billion in 2007 and originated in 40 states. A detailed list was expected to be published this week.

Republican members of the House suggested such commodities as wheat, beans, beef and rice would likely be targeted.

The back-and-forth between the U.S. and its third largest trading partner dramatized the pressure on Mr. Obama as he prepared for an April meeting of G-20 leaders in London. Mr. Obama campaigned as a trade skeptic, and urged the North American Free Trade Agreement, known as NAFTA, be renegotiated to better protect U.S. workers.

But fears are rising around the world that protectionism will erupt amid the global recession. Since he has taken office, Mr. Obama has moved to burnish his trade credentials. Last week, he told U.S. CEOs that a top priority was "making sure that we're not dropping back into protectionism."

Rising economic anxiety in the U.S. is stoking a political backlash against free trade, raising worries American workers and businesses aren't getting a fair shake in the global marketplace. Since taking control of Congress in 2007, Democrats have put the brakes on new free-trade deals.

In recent weeks, Congress has pushed to include measures requiring that U.S.-made products get favorable treatment in projects funded with Mr. Obama's $787 billion stimulus package.

The so-called Buy American provisions are creating worries abroad. During a visit Monday to New York, Brazilian President Luiz Inácio Lula da Silva warned against rising protectionism and said choking off trade threatens to hurt poor nations the most.

The International Brotherhood of Teamsters hailed the end of the road for the trucking program, and issued a sharp rebuke of Mexico's retaliatory action Monday. "The right response from Mexico would be to make sure its drivers and trucks are safe enough to use our highways without endangering our drivers," Teamsters President James Hoffa said.

A transborder trucking program was intended to be created under NAFTA in 1993, and has been a point of tension in U.S.-Mexico economic relations for years. Supporters said the program, which was designed to facilitate two-way border traffic, would bring lower consumer prices and new business.

But the program was grounded by safety concerns and political objections during the Clinton administration. As senators, both Mr. Obama and Vice President Joe Biden voted against Mexican truckers in 2007.

Under President George W. Bush, the Transportation Department eventually put a demonstration project in motion 18 months ago, hoping it would prove Mexican carriers could safely operate on U.S. roads. Instead, the program met fierce opposition.

Democratic critics have questioned whether Mexican authorities maintained adequate safety records on drivers, as well as whether Mexican drivers spoke English and were adequately tested for drugs and alcohol.

A long-time critic of the program, Sen. Byron Dorgan (D., N.D.) said he would work with the Obama administration to address the safety concerns. "I have said all along that I have no problem with Mexican long-haul trucks being allowed into the United States if it can be done safely," he said.

The pilot program at the center of the trade dispute involved 29 Mexican carriers and roughly 100 trucks, far less than the 100 carriers and 500 to 1,000 trucks initially projected by the Transportation Department.

Write to Greg Hitt at greg.hitt@wsj.com, Christopher Conkey at christopher.conkey@wsj.com and Jose de Cordoba at jose.decordoba@wsj.com

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