• New Volley of Retaliatory Tariffs Launches in U.S.-Mexico Trucking Dispute
  • September 3, 2010 | Author: Kenneth E. Siegel
  • Law Firm: Strasburger & Price, LLP - Washington Office
  • The government of Mexico has announced a list of additional U.S. grown and U.S. manufactured products on which it is imposing retaliatory tariffs that range as high as 25 percent. It also has cut some products that were on the original list and reduced the applicable tariff on others.

    The tariffs originally were imposed by Mexico eighteen months ago in retaliation for the failure of the U.S. to abide by its obligations under the transportation provisions of the North American Free Trade Agreement (NAFTA). Pursuant to the agreement, the U.S. and Mexico were to open each other’s borders to trucks from the other country that were transporting international cargo. Under pressure from the Teamsters, former President Clinton reneged on the U.S. commitment just days before the initial stage of the border opening was to take effect in 1993. The Teamsters and their allies, in spite of strong evidence to the contrary (see earlier Logistics Blog postings here and here), continue to question the safety of Mexican trucks.

    While the true concerns of these groups appear to be an exaggerated fear of losing jobs to Mexican drivers, other groups supporting the continued embargo appear to be motivated by nothing more than anti-Mexican animus.  Whatever their motivations, these groups until recently were able to get Congress to block any U.S.DOT action to implement the trucking provisions of NAFTA.

    Although the current Administration has made continual promises to the affected U.S. industries and the government of Mexico to propose a workable solution, it faces pressure from the Teamsters and other anti-Mexican groups to merely challenge the “illegal tariffs” being imposed by Mexico and to continue the embargo on entry by Mexican trucks.  The Administration itself has been quoted as voicing impatience with Mexico’s imposition of the retaliatory tariffs while U.S.DOT is developing a solution.

    The “illegal tariffs” which Mexico has “impatiently” imposed while waiting for the U.S. to meet its 17 year old international obligations are based on a decision issued in 2001 by a NAFTA dispute-resolution panel. The panel found that the U.S. prohibition on Mexican truck access violated the terms of NAFTA, and noted that this violation could subject the U.S. to billions of dollars in retaliatory tariffs and other damages if Mexico chose to exercise the remedies available to it as a member of the World Trade Organization.

    The list of new products now subject to the Mexican tariffs includes: 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.  On the other hand, shelled peanuts, dental floss, catalogs, yarn, carpets, jewelry, Venetian blind fittings, locks, metal mountings, telephone sets, battery waste/scrap and metal furniture were removed from the list.

    While U.S.DOT continues to promise the announcement of a new program that will meet both U.S. domestic concerns and the obligations of the U.S. under NAFTA, the author doubts whether such a controversial program will be unveiled prior to the hotly contested Congressional elections this November.