Now comes the news that the Senate has voted to block appropriations necessary to support the pilot program. If signed into law, this would effectively stymie Mexico's efforts to provide international transportation services outside the border region.
Jeez. I get that this is a populist issue that can be spun as pro-safety, pro-jobs, and pro-environment. Personally, I am pro all those things. I also get that NAFTA as a whole is not particularly popular at the moment. But, can we take a step back and look at this legally? The U.S. (via President George H. W. Bush) agreed to let the trucks in. Are we going to live up to our word? Maybe not. If not, there will be consequences.
This is what Article 2019 says:
If in its final report a panel has determined that a measure is inconsistent with the obligations of this Agreement or causes nullification or impairment in the sense of Annex 2004 and the Party complained against has not reached agreement with any complaining Party on a mutually satisfactory resolution pursuant to Article 2018(1) within 30 days of receiving the final report, such complaining Party may suspend the application to the Party complained against of benefits of equivalent effect until such time as they have reached agreement on a resolution of the dispute.
What this means is that if we fail to implement this (again), Mexico might finally get fed up and decide to retaliate. If that happens, U.S. exporters or service providers benefiting from NAFTA in Mexico might lose those benefits up to the point necessary to offset the loss to Mexico. Under Article 2019(2), the penalty should first affect the same sector if practical. So, this may be a lousy time to be a U.S. transportation or logistics company operating in Mexico.
It's been a while since we have had a good old fashioned trade war. But it seems like the wind might be blowing in that direction.