Obama Signs A New Attack On Trade

Remember all the fuss during the debate over the stimulus bill about the “Buy American” provision? And how the President said that, “I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade.” And that he said that, “we need to make sure that any provisions that are in there are not going to trigger a trade war,” in his interview with Charlie Gibson? And that Congress rewrote the bill so that the provision would be “consistent with international obligations”?

Well guess what: President Obama just signed a bill that not only threatens to, but actually violates, an international trade obligation, in this case, the North American Free Trade Agreement (NAFTA). And you probably didn’t even hear about it.

A provision in the $410 billion stopgap funding bill that the President signed on Tuesday prevents implementation of a provision in NAFTA that permits properly licensed Mexican trucking companies from operating throughout the United States. Specifically, the bill prevents the U.S. Department of Transportation from continuing a pilot program to begin U.S. compliance with its NAFTA obligation.

In NAFTA, the United States agreed to a gradual opening of all U.S. roads to Mexican trucks, ending a Congressional moratorium enacted in 1982. First, all border states were to be open to Mexican trucks by 1995, and then the full U.S. market upon certification of Mexican trucking companies by the U.S. Department of Transportation. But the process was supposed to be complete by January 2000.

After the Clinton Administration declined to act, a NAFTA panel unsurprisingly decided in 2001 that the U.S. was in breach of its obligations. In 2002, the Bush Administration took a major step to implementing the provision, which led to the pilot program. But Senator Byron Dorgan (D-ND), among others, has been an opponent of complying with the provision. In 2007, he and Senator Arlen Specter (R-PA), who should know better, sponsored an amendment to prevent the U.S. Department of Transportation from using funds to implement a pilot program to implement the provision nationwide. The vote was unfortunately overwhelming.

Opponents claim that Mexican trucks may not meet U.S. safety requirements. But the companies would have to be certified by the U.S., so this is a bit of a false rabbit. Anyway, the pilot program included only 103 Mexican trucks operated by 26 carriers, while the U.S. was permitted 10 carriers with a total of 61 trucks operating in Mexico. Without the pilot program, Mexican trucks are limited to a small commercial zone near the border, which severely restricts trade – or forces commerce onto U.S. trucks, depending on one’s perspective. It’s a pretty small pilot given the volume of commerce between the U.S. and Mexico but apparently too much of a threat for some NAFTA opponents.

This issue has been a persistent irritant in an important bilateral relationship. (It was already a hot issue when I was a research analyst on transportation issues 12 years ago.) It would have been nice if the President had included a specific mention of the NAFTA obligation in his signing statement on the bill. Fortunately, the Administration now claims that it will try to revive the pilot program.

Quickly, please. We do $1 billion a day in trade with Mexico. A good bit of that trade must and should be carried in trucks. A stronger Mexican economy is good for the United States and for our national security. Apparently Mexico has already prepared a list of possible sanctions against the United States in case the U.S. does not respond in a timely manner.

A trade war with Mexico is the absolute last thing either country needs right now. Keep NAFTA going, and keep on trucking.