IN OTHER WORDS:Trade spat
President Obama has been warning that tit-for-tat protectionism could drive the world into an even worse economic slump than it is already in. He is right. Unfortunately, Congress doesn’t seem to be listening. The $410 billion spending bill that Obama signed into law last week cuts off financing for a pilot program that allows Mexican trucks to deliver goods across the United States. The move clearly violates the North American Free Trade Agreement, which promised — starting in 2000 — to open cargo transport throughout the US, Mexico and Canada to carriers from all three countries.
This week, Mexico retaliated, levelling tariffs against $2.4 billion worth of American imports. Both the US and Mexico must be careful. A full-fledged fight could threaten more than $350 billion in annual commerce between the two countries. That is clearly in nobody’s interest.
It is time for Obama to put some political muscle behind his declared support for open trade. And he must make clear that — sometime soon — all properly inspected Mexican trucks must be able to work throughout the country, as Nafta requires. That would not only solve this trade spat, but it would provide the world with needed reassurance that the US will stand by its trade agreements in these difficult times.