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Economic Masochism
Posted by Pejman Yousefzadeh on Tue Mar 17, 2009 at 08:33:19 AM EST
So . . . well . . . explain this:
A long-simmering trade dispute boiled over into sanctions on Monday after Mexico said it would raise tariffs on $2.4bn of US exports in retaliation for ending a pilot programme to allow Mexican trucks on American roads.The announcement marks one of the first big tests for trade policy under President Barack Obama, who has sought to tread a fine line between assuaging his domestic constituencies and upholding the US's international obligations.
Mexico said it would increase tariffs on 90 industrial and agricultural goods, likely to include politically sensitive farm products, after Congress last week killed a pilot programme allowing a limited number of Mexican trucks on American highways. Mexico obtained a judicial ruling in 2001 under the North American Free Trade Agreement (Nafta) allowing it to impose such sanctions, but has held off since the US introduced the pilot scheme.
The sanctions, which Mexican officials say are set to be imposed later this week, will be one of the largest acts of retaliation against US exports. US goods exports to Mexico totalled $151.5bn last year. On Monday, Gerardo Ruíz Mateos, Mexico's economy minister, said: "We believe that the action taken by the US is wrong, protectionist and in clear violation of Nafta."
As the story makes clear, the cancellation of the program was done at the behest of unions like the Teamsters. And despite the claims that Mexican trucks are less safe than their American counterparts--a claim used to justify the cancellation (protectionists never cite actual protectionism for the trade barriers they erect; they always use "labor" or "safety" or "the environment" as justification for their concerns)--a Department of Transportation study found that in many instances, Mexican trucks are safer than American ones.
An saboteur could not have done a better job of undermining American economic interests than the Obama Administration's Democratic allies in Congress have done with this move. And to be sure, the Administration could have shut down the effort . . . but chose not to.
One wonders what other international trade agreements the Administration will unilaterally--remember when that was a bad word?--break. And one wonders what other damage will be done to American economic interests.
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