For a guy who loves "free trade" and is supposed to represent U.S. workers and businesses, U.S. Trade Representative Ron Kirk seems way too comfy with tariffs being slapped on American exports. Instead of renegotiating a North American Free Trade Agreement (NAFTA) requirement that Mexico-domiciled tractor-trailers have full access to U.S. roads, Kirk is allowing a second year of sanctions against $2.5 billion in U.S. exports to Mexico.
Mexico was authorized to impose such tariffs, which it renewed this week, after a NAFTA tribunal ruled that the U.S. was violating NAFTA truck access rules. Speculation is that USTR thinks Congress will do a U-turn on this issue if enough economic pain is imposed via sanctions. (The sanctions seem to be having the opposite effect on Congress.) But isn't that supposed to be Mexico's line, while U.S. trade officials fight for U.S. interests not NAFTA uber alles?
Anyway, with concerns over the prospect of interlocking highway and political carnage, Congress is not going to prioritize NAFTA compliance over public safety. Congress explicitly blocked attempts by George W. Bush to do so.
Yup, Bush tried repeatedly to implement the rules that require truck access without requiring safety or environmental standards be met. And, for years, the Department of Transportation's Inspector General and highway safety and consumer groups reiterated that Mexico's truck and commercial driver safety standards and enforcement are well below those of the U.S. Congress set a list of requirements based on domestic standards - basic stuff like monitoring hours of service, access to drivers' highway safety and drug test records, and certain safety requirements for the trucks.
Understandably, until the safety situation improves, Congress must not allow Mexico-domiciled trucks onto American roads. At the same time, Mexico is far from being able to meet key truck and driver safety standards. Yet, NAFTA provides Mexico a right of access and obligates the U.S. - thus the indefinite sanctions.
So what's to be done? Just around the corner from the irony of a trade pact leading to higher tariffs is the answer: negotiations to remove the trucking access obligation and swap it for something else. In trade terms, this is called negotiated compensation.
That is how USTR Kirk ended almost a decade and hundreds of millions of dollars in trade sanctions related to a U.S. WTO win against Europe's ban on artificial beef growth hormones. All those U.S. tariffs and years later, European politicians preferred to live with indefinite sanctions and avoid meeting sharpened forks and knives - and unfavorable election returns - from a European public opposed to what it considered unsafe food additives. So, the U.S. agreed to trade the sanctions against Europe for...more trade with Europe! (Better access for non-hormone beef.)
Congress and the American public are not going to budge on NAFTA trucks. So, let the NAFTA fixing begin. Members of Congress have been calling for that approach all year.
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