On October 8, Mexico is set to become a full partner in the Trans-Pacific Partnership (TPP) negotiations. As Mexican Ambassador to the United States Arturo Sarukhan is fond of saying, with TPP Mexico and the U.S. are playing chess, not checkers. Indeed, Mexico’s participation in the high-standards pact represents a unique opportunity to consolidate our strategic bilateral partnership and deepen our economic integration in the context of like-minded countries along the Pacific Rim.
Yet even as we celebrate cooperation at the level of geopolitics and multilateral negotiations, we cannot ignore the more prosaic frictions that inevitably arise in such a broad and dynamic relationship. Recently, these have included spats over chickens and washing machines, while the latest issue revolves around tomatoes.
Tomato disputes have a long history. With the advantages of ideal soil and climate conditions and low labor costs, Mexico became a major player in the U.S. market following the embargo placed on Cuba in 1962. After decades of tomato trade wars, the signing of the North American Free Trade Agreement (NAFTA) in 1992 eliminated tariffs on Mexican tomatoes over a ten-year transition period, despite the opposition of Florida agricultural producers. In 1996, at the behest of Florida’s tomato industry, the U.S. Commerce Department initiated an anti-dumping investigation to determine whether tomato imports from Mexico were being sold at less than fair market value. To suspend the investigation, Mexican producers agreed to a minimum price for imports. This so-called “suspension agreement” has been honored for 16 years, with two renewals as well as adjustments of the reference price.
Fast forward to the electoral year of 2012, and Florida tomato growers have requested that the Commerce Department end the suspension agreement so they can initiate a new anti-dumping investigation against Mexican tomatoes. They argue that the agreement is outdated and fails to protect them against the Mexican competition; their critics accuse them of a transparent attempt to use a swing state’s political clout on behalf of protectionist interests.
On Wednesday, October 12, just in time for the October 13 State Visit of South Korean leader Lee, both the House of Representatives and the Senate passed the pending trade agreements with South Korea, Colombia and Panama. The agreements were too long delayed, but the overwhelming margin of victory for all agreements in both chambers gives credibility to the argument that the Administration frequently made: to build sustainability for the trade agenda, broad-based political support was required, and political support had to be developed over time, with careful and methodical coalition building. In the end, Panama received 300 votes in favor of the agreement in the House, passing by 171 votes. The most controversial agreement, Colombia, received 262 votes and passed by 95 votes. Compare that to the passage of the trade agreement with Central America in 2004, which won approval by exactly two votes. This new margin of victory lays the groundwork for renewal of a politically sustainable trade agenda, and is a bright spot for those of us who believe trade remains one of the best tools that the United States has to support our security and economic interests abroad.
The agreements still need to be signed by the President and there will be a period of time before implementation actually occurs. But the biggest battle has been won. As a result—this being Washington—claims of credit abound. Indeed, there is much credit to go around. But some are more equal than others in this department, and deserve to be singled out for special praise.
The first, of course, is President Obama himself. At a yet-to-be-determined political cost, and little potential direct political benefit, the President defied the roots of the Democratic party to advance the agreements as part of his “doubling exports in five years” initiative. Unquestionably, his views on trade have evolved since the 2008 campaign, and by moving the deals forward, he has effectively neutralized trade as a potential wedge issue for the 2012 presidential campaign, which, importantly, will provide greater political flexibility to the President on these issues after January 2013. He got the deals done and moved them forward. He won’t get appropriate credit for it, but that does not mean he does not deserve it.
Trade Representative Ron Kirk, who renegotiated the agreements, Secretary of State Hillary Clinton, who publicly set a deadline when she told the foreign minister of Colombia in June that the deals would be done by the end of 2011, and White House Chief of Staff Bill Daley did much of the political heavy lifting to lay the groundwork for submission to Congress. They are all on the heroes list.
The Obama administration took a positive step today toward resolving a long-simmering point of contention for U.S.-Mexico relations. A two-page concept document released by Secretary Ray LaHood and the Department of Transportation (DOT) outlines a series of proposals to revive the long haul, cross-border Mexican trucking program—an issue that has affected U.S. exports to a key U.S. trade partner.
Since March 2009, the United States and Mexico have sparred over allowing Mexican trucks to carry cargo into the United Sates. President Obama cancelled the program after concerns over the safety records of Mexican drivers and carriers as well as their lack of English. The move was seen as anti-free trade and protectionist by both U.S. and Mexican companies.
Soon after the President cancelled the program, Mexico denounced the move citing its violation of the North American Free Trade Agreement (NAFTA), which called for creating a cross-border trucking program by 2000. In response, Mexico imposed tariffs on products ranging from pork to chewing gum and pistachios. Once an agreement is reached, these retaliatory tariffs would be lifted.
Today’s concept document aims to renew negotiations with Mexico while also addressing concerns that led to the cancellation of the program. The document proposes vetting the information of both carriers and drivers through the Department of Homeland Security and the Department of Justice. Additionally, Mexican truck drivers and their carriers must pass a Pre-Authority Safety Audit (PASA) that includes a review of the carrier’s safety record and driver’s record, compliance with EPA emissions standards and a review of the carrier’s accidents, convictions and inspections in Mexico. Mexican drivers must also pass an English Language Proficiency exam and a U.S. Traffic Laws exam (conducted in English) and submit evidence of financial responsibility (insurance) to the Federal Motor Carrier Safety Administration.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.