Mexico to Scrap Rotation of Retaliatory Tariffs On U.S. Products

Mexican Trade Minister Bruno Ferrari says the country no longer will rotate permitted tariffs on U.S. imports on an annual basis.

Mexican Trade Minister Bruno Ferrari says the country no longer will rotate permitted tariffs on U.S. imports on an annual basis. Instead, and as a gesture of good will, the list of products will remain in place as the two nations continue negotiations aimed at allowing long-haul Mexican trucks to operate in the United States. Ferrari's announcement comes less than a week after U.S. Transportation Secretary Ray LaHood issued a draft document outlining a way forward for those negotiations.

The rotation of tariffs, sometimes referred to as a "carousal" approach provides Mexico with additional leverage over the United States. By shifting tariffs from one category of imports to another, the action hits more sectors of the U.S. economy, thus multiplying the likely political and economic pressure on trade officials to settle the case.

For the past year, Mexico has imposed tariffs sanctioned by the North American Free Trade Agreement on a wide range of U.S. imports valued at $2 billion in retaliation for the failure of the United States to permit Mexican trucks to operate beyond a small zone contiguous with the U.S.-Mexican border.

The trade spat was sparked in 2009 after a pilot program permitting Mexican trucks to cross into the United States was suspended. In response, Mexico in March 2009 imposed retaliatory tariffs on exports. Mexico argued that the United States had breached its obligations under NAFTA.

Ferrari said Mexico is waiting for further progress toward ending the ban on Mexican trucks before it will lift the tariffs. However, Ferrari added, "Once we have dates, time frames and the manner in which this NAFTA mandate will be met, we'll present and discuss the process to lift the retaliatory tariffs."

Speaking with reporters in Mexico City following a meeting of the three NAFTA trade ministers, U.S. Trade Representative Ron Kirk predicted that a program to allow Mexican trucks to operate in the U.S. could be "up and running" in four to six months. Kirk added that he "would like to sit down and begin" negotiations with Mexico in the next week. If that happens and if the U.S. Congress approves one, Kirk said a program could be "up and running as quickly as within the next four to six months."

The "concept paper" put forward by LaHood would put in place a new inspection and monitoring regime, and provides that passenger and hazardous materials carriers will not participate in the program.

In the first phase of the program, the number of carrier and truck participants would be managed to ensure adequate oversight, according to the concept paper.

The program contemplates that applicant carriers' information and driver specific information will be vetted by the U.S. Department of Homeland Security and the Department of Justice. 

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