A trade war with Mexico over 97 trucks

Here is where the trade war came from:

The Obama Administration, by putting an end to a program that allowed some Mexican long-haul trucks into the U.S., has triggered a slew of retaliatory tariffs from Mexico. The White House seems to be looking for a way to resolve a dispute that it failed to avert, despite much forewarning. But it looks like it may be too late to avoid the $2.4 billion in tariffs altogether, experts say.

On Mar. 16, Mexico announced tariffs on about 90 items from 40 U.S. states, mostly on agricultural products. It was retaliation for Congress' decision last week to kill a program meant to defuse a dispute that has lasted more than 13 years over the right of U.S. and Mexican long-haul trucks to cross each other's border carrying goods. Mexico contends that the U.S. is violating the North American Free Trade Agreement, which provides for free movement by each member state's trucks. Congressional critics say Mexican trucks are unsafe and do not belong on U.S. roads. . . .

on Mar. 10, Congress passed a $410 billion government spending bill containing a clause inserted by Senator Byron Dorgan [D-N.D.] killing the pilot program, and the following day Obama signed it.

A study used as a weapon by both sides was issued on Feb. 6 by Joseph W. Come, Assistant Inspector General for the U.S. Transportation Dept. The study concluded that long-haul Mexican trucks were in many cases safer than similar U.S. vehicles. But critics of the trucking provision note that the study included a caveat that, in Come's opinion, the number of vehicles inspected was too small to be conclusive. . . . .

Here is more on what this trade war was over:

The program Congress terminated allowed 97 Mexican trucks to roam among them. Ninety-seven! Shutting them out not only undermines NAFTA. It caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade coming out of 40 states. . . . .

The New York Times doesn't see it quite this way, but trade barriers are going up all over the world because of Obama.

After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.

From a looming battle with China over tariffs on carbon-intensive goods to a spat over Mexican trucks using American roads, barriers are going up around the world. As the recession’s grip tightens, these pressures are likely to intensify, several experts said.

The surge in protectionism is casting a shadow over an economic summit meeting of world leaders scheduled for London on April 2. At the last such gathering, in Washington in November, former President George W. Bush persuaded the Group of 20 members to commit to protecting free trade — whatever the pressures caused by faltering economies and lost jobs. The members include industrialized and developing nations, and the European Union. . . . . .

Of course, all this going on with trade dropping a lot this year. The BBC reports:

Global trade flows are set to shrink by 9% during 2009, according to a forecast by the World Trade Organization (WTO).

Hardest hit will be developed nations, where trade is set to fall 10%. Poorer countries will see exports fall 2-3%.

The WTO blames the deepening recession for the downturn, but says trade could be "a potent tool" for recovery.

It would be the biggest drop in trade since World War II, said WTO Director-General Pascal Lamy, who called on global leaders to fight protectionism. . . . . .