Wednesday, December 19, 2007

Gearing Up for a Trade War?

Since 2001, Mexico has been entitled under the NAFTA to send trucks into the U.S. Since 2001, the U.S. has refused to allow that in any meaningful way. First, before I get any e-mail or comments about the danger NAFTA represents to our sovereignty, keep in mind that the U.S. has so far refused to do what it agreed to in the NAFTA. This is not a sovereignty issue. The U.S. government still controls the borders, at least in a legal sense (if not always in a practical sense).

The current Bush administration created a pilot program to permit authorized Mexican trucking companies to operate in the U.S. Now the funding for that program is at risk in Congress. Based on this article, it seems that Mexico is getting fed up with waiting and is contemplating retaliation. Under NAFTA, retaliation means imposing duties on U.S. merchandise shipped into Mexico at a level equivalent to the harm Mexico suffers as a result of the truck blockade.

This is not good news for the farmers and ranchers who ship goods to Mexico duty-free under the NAFTA.

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