Saturday, September 19, 2009

White House: $2.4 Billion Is a Small Price to Pay For Teamster Support - Especially When We're Not Footing the Bill!

The depressing news for US trade policy just keeps on coming.  According to a few news reports, the Obama Administration has admitted that it will not resolve the US-Mexico trucking dispute in 2009 and might not do anything in 2010.  Here's WorldTradeInteractive with the details:

Business and farm groups whose members have taken a hit from the retaliatory tariffs Mexico imposed on U.S. exports earlier this year in a dispute over cross-border trucking are trying to keep pressure on the Obama administration to resolve the dispute. It appears, however, that the White House has no plans to do so in the near future, and the increased duties are thus likely to remain in place well into 2010.

On March 20, Mexico reimposed tariffs of 10% to 45% on $2.4 billion worth of U.S. exports in retaliation for the termination of a U.S. pilot project that allowed up to 100 Mexico-domiciled motor carriers to operate beyond the border commercial zones and the same number of U.S. carriers to operate in Mexico. Affected products include Christmas trees; certain fruits, vegetables, juices and nuts; health and beauty items; tableware, kitchenware and glassware; manmade fiber yarn; carpets; jewelry; home appliances; sunglasses; and pens and pencils. Mexican officials have said they are prepared to lift the retaliatory tariffs if the pilot project is reinstated.

In the intervening months affected U.S. exporters have repeatedly urged the Obama administration to quickly resolve the dispute, asserting that the higher tariffs are harming their ability to compete in the important Mexican market. Most recently, agriculture officials of nine Western U.S. states sent a letter to President Obama Sept. 10 stating that the tariffs have been “extremely harmful” for farmers, who have not only seen declining shipments to Mexico, which accounts for one-seventh of all U.S. agricultural exports, but are also losing market share there to other competitors that may not easily return even once the tariffs are lifted. The letter was supported by the Alliance to Keep U.S. Jobs, a group of more than 150 U.S. manufacturers, companies and agricultural interests formed to address this particular issue.

At the same time, however, the issue appears to have fallen off the White House’s radar screen. Transportation Secretary Ray LaHood led an interagency effort to come up with a plan that allows the cross-border trucking program to resume but also addresses the concerns of the lawmakers who voted to end the previous program. Press reports indicate that this plan has been floated to key policymakers but that no further action has been taken, largely because the attention of both the administration and Congress has been focused on economic recovery and health care reform efforts. According to an Inside US Trade article, in a Sept. 15 meeting with the Alliance, Under Secretary of Transportation for Policy Roy Kienitz “signaled that any potential resolution was no longer in DOT’s control and now rested within President Obama’s inner circle within the White House” and said he would be “surprised” if the dispute were resolved this year. The article also cited an unnamed source as saying that because the administration needs the help of unions, who strongly oppose the trucking pilot program, on health care, the trucking dispute “just does not seem to be a top priority right now.”
As I've noted previously, the trucking dispute started when Congressional Democrats back in March inserted a provision into the 2009 Omnibus Appropriations Act that defunded the aforementioned "pilot project."  The 2009 trucking ban was a blatant sop to the Teamsters that has resulted in $2.4 billion in Mexican retaliation and drawn strong criticism from pretty much everyone on the planet.  And remember: the Bush Administration pilot project showed that the Mexican trucks were safer and cleaner than their US counterparts. (So don't go buying the President's "congressional safety concerns" nonsense.) Yet despite the tariffs, the domestic pleas for relief, the international rebuke and the public shaming, the White House has decided to take it easy and just sit this one out for a while.  Nice.

And once again in the battle between domestic politics and a coherent, robust international trade policy, the Administration has chosen the former.  At this point, is anyone really surprised?

But hey, let's give the White House some credit: they're getting a fantastic deal.  According to the Teamsters website, there are about 900,000 active members in the union.  So by my math: $2.4 billion in US economic injury / 900,000 teamsters = only about $2500 per teamster.  To the White House, that's a veritable bargain to ensure strong union support for ObamaCare and other domestic priorities.

Of course, it's an even better deal when someone else - namely, US farmers, ranchers and manufacturers - is paying the tab.

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