Today marks the one-year mark since President Barack Obama signed the Omnibus Appropriations Act of 2009, which among its many details included a provision to end funding for the Cross-Border Trucking Demonstration project, which allowed a limited number of Mexican and U.S. trucks to cross the border freely.
Mexico almost immediately retaliated with tariffs on 90 U.S. goods. With restrictions on the border seemingly no closer to easing, the U.S. Chamber of Commerce is claiming that more $1.5 billion of manufactured products and $900 million in U.S. agricultural products, not to mention 25,000 jobs, have been impacted by the tariffs.
“Just weeks ago, the business community cheered President Obama when he set the goal at his State of the Union address to double U.S. exports,” John Murphy, vp of international policy for the Chamber, said during a media briefing. “We’d love to double U.S. exports, not cut them in half. But that is exactly what is happening to some U.S. exports to Mexico.”
According to Murphy, 56 members of the U.S. House of Representatives sent U.S. Secretary of Transportation Ray LaHood and U.S. Trade Representative Ron Kirk a letter on March 1 noting the “devastating impact on our local industries and area economies” the tariffs have had.
The letter added that members of Congress have seen “none of the principles and parameters of the proposed plan” to end the dispute.
LaHood, testifying before the Senate Transportation, Housing and Urban Development Appropriations Subcommittee on March 4, said a plan to reopen the border is near.
“We are finalizing a plan,” LaHood testified. “The reason it’s taken so long is because there’s a lot of different moving parts, including about five different cabinet officials, and every time we make a tweak or a change everybody has to sign off on it. But we’re very near a proposal that we think will meet all of the safety concerns that I heard when I talked to 25 members of Congress.”
The cross-border program allowed up to 100 Mexican carriers to operate inside the U.S. borders beyond the 25-mile commercial zone that had been in place since 1982. It also allowed up to 100 U.S. carriers to operate throughout Mexico. The Chamber estimates that the lack of a program, and the resulting tariffs, have raised costs to U.S. businesses by $2.2 billion and resulted in $223 million in lost exports.
There is a long history of border disputes when it comes to trucking between the countries and several lawsuits and other instances of finger-pointing have taken place. One thing remains clear, according to John Keeling, executive vp & CEO of the National Potato Council, the lack of an agreement is hurting U.S. businesses.
“We have been the canary in the coal mine on this issue in some ways,” Keeling said, “because the products that the retaliatory tariffs were placed on were frozen potato products and virtually the identical products we export to Mexico are exported from Canada.”
According to Keeling’s organization, frozen potato exports were down 51% from 2008 to 2009, but exports of those same goods from Canada to Mexico increased 55%.
“What you see in potatoes is really a microcosm of what you’ll see in other products as you move forward,” Keeling said. “Delay is costing U.S. jobs at a time when for very little money and an expenditure of political capital, we could create a situation where we’re restoring jobs in the U.S. The inattention and inaction is creating a situation where we’re continuing to lose jobs.”
Doug Goudie, director of international trade policy for the National Assn. of Manufacturers, echoed Keeling’s thoughts.
“We found that about 65% of the total products hit in value (by the tariffs) are manufactured products,” he said. “About 16,000 manufacturing jobs in the United States have either been lost or are at risk of being lost. About $1.5, $1.6 billion worth of manufacturing exports have been impacted.
“Some of the companies have chosen to eat the tariffs in order to maintain their market share,” he added. “But we have heard from some of our largest companies and a great many of our smaller ones, that as this one-year anniversary comes up, their business model shows that they cannot continue to do this.”
Within weeks of the cancellation of the program in March 2008, Obama said his administration would work with the Mexican government to develop a new program. At the one year mark, some are worried about U.S producers losing market share.
“We can’t wait and wait and wait on trade,” Murphy said. “When we stand still, we fall behind.”
