Southern neighbor threatens tariffs on U.S. products

Mexico has announced a decision to increase tariffs on 90 U.S. products in retaliation for a congressional decision last week to remove the funds for the Department of Transportation's Mexican truck demonstration project, making it clear the NAFTA trucking is by no means finished.

WND reported one day after signing the $410 billion omnibus funding bill into law, along with its provisions ending the DOT Mexican truck demonstration projects, President Obama instructed the Office of the U.S. Trade Representative to work with Congress, the DOT, the state department and Mexican officials to come up with legislation to create "a new trucking project that will meet the legitimate concerns" of Congress under the North American Free Trade Agreement, or NAFTA.

Then the Mexican Economy Department told a news conference in Mexico City that the new tariffs will affect about $2.4 billion in trade, impacting 90 agricultural and industrial products exported to Mexico from some 40 U.S. cities, according to the Associated Press.

Teamster President Jim Hoffa characterized the Mexican government's threat as an "absurd overreaction."

"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," Hoffa said. "The border must stay closed until Mexico upholds its end of the bargain."

The Teamsters estimate the U.S. government spent $500 million on the Mexican truck pilot program, which began in September 2007.

"The U.S. needs to stop agreeing to trade deals like NAFTA that allow our own safety standards to deteriorate," Hoffa said.

The Owner-Operator Independent Drivers Association, or OOIDA, also reacted sharply to Mexico's threat.

"I think before we get another pilot program or demonstration, Mexico has to get their laws up to United States standards and then we can talk about moving forward," said Rod Nofziger, OOIDA's director of government affairs.

With the Obama administration likely to push forward to meet Mexico's demands before new tariffs are imposed, battle lines appear once again to be forming along lines of determining whether or not Mexican trucks and truck drivers will be able to comply with U.S. standards.

The Mexican truck issue became rancorous over the past two years as Bush administration Secretary of Transportation Mary Peters fought off repeated efforts by Congress to confine Mexican trucks to a narrow 20-mile-wide commercial area north of the southern border.

WND reported that after the truck project began, an examination of the Federal Motor Carrier Safety Administration database revealed hundreds of safety violations by Mexican long-haul rigs on U.S. roads.

The contention of opponents has been that Mexican trucks and truck drivers do not reliably meet U.S. standards.

As WND reported, in a contentious Senate hearing last March, Dorgan got Peters to admit that Mexican drivers were being designated at the border as "proficient in English" even though they could explain U.S. traffic signs only in Spanish.

In the tense hearing, Dorgan accused Peters of being "arrogant" and in reckless disregard of a congressional vote to stop the truck project by taking funds away.

As WND reported, opposition in the House was led by DeFazio, who in September 2007 accused the Bush administration of having a "stealth plan" to allow Mexican long-haul rigs on U.S. roads.

"This administration [of President George W. Bush] is hell-bent on opening our borders," DeFazio then said, "but has failed to require that Mexican drivers and trucks meet the same safety and security standards as U.S. drivers and trucks."

Previously, Peters had argued the wording of the Dorgan amendment did not prohibit the Transportation Department from stopping a Mexican truck project already under way, even if the measure prohibited DOT from starting any new project.

Despite strong congressional opposition, the Department of Transportation under President Bush announced in its final months it planned to extend the truck project for another two years – an attempt to force the incoming Obama administration to comply.

Obama backtracking on NAFTA promises?

The administration's determination to open the U.S. to Mexican trucks raises questions about whether Obama intends to fulfill campaign promises to renegotiate NAFTA to get provisions more favorable to American workers and jobs.

During the presidential campaign, top Obama economic adviser Austan Goolsbee, an economics professor at the University of Chicago business school

, stirred controversy after reporters learned he traveled to Canada to reassure Canadians that Obama's harsh words about NAFTA were just campaign rhetoric.

In the Ohio and Pennsylvania Democratic Party primaries, Obama pledged to renegotiate NAFTA as part of his appeal to workers in the states that have lost manufacturing jobs under the free trade agreements negotiated by Presidents Clinton and George W. Bush.

Now, Goolsbee has joined the Obama administration, having taken a leave of absence from the University of Chicago after Obama appointed him chief economist and staff director of the newly created Presidential Economic Recovery Advisory Board, chaired by former Federal Reserve Chairman Paul Volker.

Obama also appointed Goolsbee to the Council of Economic Advisors, or CEA, which is charged with assisting in the development of White House economic policy.

In his first trip to a foreign nation, Obama traveled to Canada, where he used a press conference with Canadian Prime Minister Stephen Harper to backtrack on his promise to renegotiate NAFTA.

The London Guardian reported Obama's comments in Canada "muddied his position" on NAFTA.

Obama responded to a question at the joint press conference with Harper saying, "Now is a time where we have to be very careful about any signs of protectionism."

Translated, this meant that any renegotiation of NAFTA by the Obama administration might involve fine-tuning some of the side agreements, not renegotiating NAFTA itself in any fundamental way.

Then there was the issue of the "Buy American" provision inserted into the administration's $787 billion economic stimulus plan.

Canada was concerned that the provision could hurt Canadian steel exports to the U.S., and the EU complained the provision was antithetical to the spirit of the Transatlantic Economic Council, which President Bush signed with the EU last April.

The Obama administration did not object when language was added to the economic stimulus bill to specify that the "Buy American" provision would be interpreted as buying American products if it was consistent with U.S. international trade obligations. That meant any free trade agreement would override the obligation.

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