More U.S. Goods Face Tariffs in Mexican Trucking Dispute

This story appears in the Aug. 23 print edition of Transport Topics.

The Mexican government last week imposed a second round of retaliatory tariffs on U.S. exports to protest the closing of the common national boundary to cross-border trucking and said the United States has yet to propose a plan to allow trucks from Mexico to deliver in the United States.

Pork, cheese, pistachio nuts, ketchup and citrus fruits are among the new products subject to levies as high as 25%.

“Mexico was initially encouraged by the fact that, in December 2009, the U.S. Congress removed the legal restriction on the Department of Transportation’s budget that banned the use of funds to implement the cross-border trucking program with Mexico,” the Embassy of Mexico said in a statement last week.

“However, Mexico has yet to receive a formal proposal for the resolution of this dispute and an unequivocal signal that the U.S. government is working to eliminate the barriers that Mexican longhaul carriers face to access the U.S. market.”

The border was supposed to open as part of the North American Free Trade Agreement between the United States, Mexico and Canada but has been kept closed because of political objections in this country.

U.S. officials have said repeatedly they are working to find a resolution to the dispute. Earlier this year, the two countries said they would form a working group to discuss the matter but the group wouldn’t begin meeting until after the United States presents its plan to Mexico.

The lack of progress, the Mexican Embassy said, led the country to revise its list of products subject to tariffs — adding 15 items and dropping a handful of mostly manufactured goods — to increase the total number of goods subject to the levies to 99.

In March 2009, Mexico placed tariffs totaling about $2.4 billion a year on 89 products. The new list has “a similar total export value to Mexico,” the embassy said in the statement.

An official with knowledge of the situation told Transport Topics that “both last year and this year [Mexico’s] main criteria is to limit self-inflicted pain and not add inflation to [its] economy.”

Olivia Alair, a spokeswoman with the U.S. Department of Transportation, said Aug. 16 that the agency “is developing a new proposal that will meet congressional concerns, as well as our NAFTA commitments.”

U.S. Trade Representative Ron Kirk said Aug. 16 that the Obama administration was “disappointed that the Mexican government has announced its intention to impose duties on additional U.S. products related to the cross-border trucking dispute between our countries.”

Kirk said that he and Transportation Secretary Ray LaHood “have worked with other agencies and stakeholders in Congress seeking to resolve this issue in a way that addresses safety concerns and upholds our trade obligations.”

Mexico added pork products, cheeses, frozen corn, pistachios, oranges, grapefruit, apples, oats, grains, chewing gum, chocolate, ketchup, polishes, adhesives, rubber gloves, rubber floor coverings, thermos containers, trench diggers and gas masks to the list of products subject to the tariffs.

Conversely, shelled peanuts, dental floss, catalogs, yarn, carpets, jewelry, Venetian blind fittings, locks, metal mountings, telephone sets, waste and scrap of battery cells and metal furniture were removed.

Mexico also altered some tariffs, such as cutting the tax on frozen processed potatoes to 5% from 20%.

Under NAFTA, the United States and Mexico were to have opened their borders to longhaul trucking in 1994, but a moratorium kept Mexican trucks out until 2007, when a pilot program was launched.

Congress ended the program in March 2009.

Industry groups affected by the tariffs said they have hurt their business.

“We are extremely disappointed that our top volume export market has taken this action,” said Sam Carney, a pork producer from Adair, Iowa, and president of the National Pork Producers Council, “but we’re more disappointed that the United States is not living up to its trade obligations.”

According to the council, Mexico spent $762 million on U.S. pork products last year.

Kraig Naasz, president of the American Frozen Food Institute, said adding frozen corn and ham products to the tariffs list “increases the scope of food industries adversely affected.”

Naasz said that even cutting the tariff on frozen potatoes will continue to inflict harm on an already battered industry.

“In one year’s time, the 20% retaliatory tariff on U.S. frozen potato products cost the U.S. frozen potato industry an estimated $33 million in revenue,” he said.

Opponents of cross-border trucking urged the United States to resolve the dispute by fighting the tariffs, rather than restarting the program.

“We put a lot of blame with the USTR,” the U.S. Trade Representative, said Rod Nofziger, director of government affairs for the Owner-Operator Independent Drivers Association. “They should have done something to challenge the tariffs 18 months ago, and their inaction in all likelihood has encouraged Mexico to move forward with additional tariffs.”

James Hoffa, president of the Teamsters union, also called on the Obama administration to challenge the levies.

The Teamsters union, OOIDA and other opponents of cross-border trucking have said they question the safety of Mexican trucks, a charge the Mexican government has denied.

“The decision to end the program was never about the safety of America’s roads,” the Mexican Embassy said. “It was driven by protectionism, the costs of which are borne by businesses, workers and consumers in our two nations.”