Wednesday, March 18, 2009

Sign a Budget, Breach a Treaty

The North American Free Trade Agreement has provisions in it to allow Mexican trucks (among others) to deliver their cargos inside the United States, and to allow US trucks to deliver cargos in those other countries. Without this, cargos have had to be unloaded from one truck and reloaded on another in border areas to cross from one country into the other. This treaty provision was phased in over several years, and was associated with aggressive safety inspections of the trucks involved.

That wasn't good enough to satisfy the Teamsters Union, which has consistently demanded this treaty provision be changed or breached. The Teamsters claimed their objection is based on safety concerns, but their real objection is that the Mexican truck drivers don't pay them. Now they have Congress and the White House doing their bidding, and they are willing to go to war over 98 trucks. (If safety were really their concern, they would have dropped their objection — the Mexican trucks have turned out to be safer than their US counterparts.)

And so a small item was sneaked into the $410 billion omnibus spending bill, passed by Congress and signed by President Barack Obama, to kill this trucking program. As that took effect, Mexico responded by slapping tariffs on some 90 products from 40 states. This is likely to be the first response to the US starting a trade war. CNN quotes Senator John McCain saying

"Unfortunately, this is a predictable reaction by the Mexican government to a policy that now puts the United States in clear violation of the North American Free Trade Agreement and was inappropriately inserted into the omnibus appropriations bill," McCain said after learning of the Mexican government's plans.

Now the Administration is saying it really doesn't want to start a trade war, and it wants to work with Mexico to come up with a new trucking plan. But, as the Wall Street Journal noted, "unilateral treaty violations aren't the way to get other nations to negotiate concessions."

Unfortunately, this is the kind of diplomatic expertise we're coming to expect from this Administration.

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