Democrats Trigger North American Trade War
Protectionism is about as stimulating as a cold shower on a hot date.
By Deroy Murdock
As if America’s hands were not full already — from Iran to Afghanistan to North Korea — Democrats in Washington, D.C. have increased tensions with our next-door neighbors. Canada and Mexico, our top two export markets, are embroiled in trade feuds with the U.S., both triggered by American protectionism. As a global leader and a decent hemispheric neighbor — especially during these economic doldrums — the United States should immediately rejoin Canada and Mexico on the road to free trade.
The burgeoning chaos to our north and south illustrates the counterproductivity of trade restrictions. When Uncle Sam blocks the flow of goods and services across borders, our trading partners rarely sit there and take it. They hit back. And once the fists fly, we all get black eyes.
For starters, Canadians find February’s $787-billion stimulus package as stimulating as a cold shower on a hot date. It requires American-made construction materials in all federally funded public-works projects. This “Buy American” provision would keep U.S. roads, bridges, and tunnels free of Canadian iron, steel, and other components, although such Canadian inputs were allowed before the Democratic Congress passed and President Obama signed this measure.
Canada began fighting this provision at Halton Hills, Ont., where a water-treatment-equipment manufacturer called Hayward Gordon fears Washington will block its southbound exports. Ironically, such limitations will impoverish American companies that supply parts for this Canadian firm’s products. The Halton Hills council responded to February’s regulations with its own don’t-buy-American rule for purchases by the town government.
Expanding this local boycott, the Federation of Canadian Municipalities voted June 6 to back localities that refuse to buy from nations that block Canadian goods and services — primarily, the Land of the Free and the Home of the Brave.
“This U.S. protectionist policy is hurting Canadian firms, costing Canadian jobs, and damaging Canadian efforts to grow our economy in the midst of a worldwide recession,” Federation president Jean Perrault, the mayor of Sherbrooke, Qué., told Reuters.
The scene is equally grim south of the border.
Obama’s $410 billion omnibus spending plan defunded a pilot program in which about 100 Mexican trucks were allowed to drive goods into the U.S. beyond a 25-mile frontier zone. American trucks were given equal access to Mexican destinations. (Removing goods from one country’s trucks and reloading them onto the other’s for onward travel has boosted transit costs anew. These eventually increase price tags.)
Mexico correctly argues that the North American Free Trade Agreement, which President Clinton signed in 1995, opened U.S. roads to Mexican trucks. However, Washington kept dragging its feet. In 2002 Congress imposed 22 safety regulations on Mexican (but not Canadian) trucks, and it was only in 2007 that the Bush administration started the pilot program. In exasperation at the ending of this program, Mexico has raised tariffs on 90 American exports worth $2.4 billion, including grapes and toilet paper. This will reportedly kill 40,000 American jobs. Mexico’s backlash against U.S. protectionism interrupted its unilateral reduction of average industrial tariffs from 10.4 percent in 2008 to a projected 4.2 percent in 2013.
Even worse, June 1 brought word that Canacar — an association of 4,500 Mexican trucking companies — had filed a grievance with the U.S. State Department seeking $6 billion in damages because of the pilot program’s termination and the resulting brick wall that arose in front of big rigs at the border.
“We want reciprocity,” Canacar attorney Pedro Ojeda told the Wall Street Journal. “The U.S. has notoriously not kept its commitments.”
Democrats claim Mexican trucks are dangerous. However, the Arizona Republic found that between 2003 and 2007, 1.2 percent of Mexican truckers in America were non-compliant with safety rules, versus 7 percent of U.S. drivers. As Arturo Sarukhán, Mexico’s ambassador to the United States, wrote in the March 18 Wall Street Journal: “During the 18 months that the program was in operation, 26 carriers from Mexico (with 103 trucks) and 10 from the U.S. (with 61 trucks) crossed the border over 45,000 times without any significant incident or accident.”
“Mexico has been the grown-up in this dispute,” says Dan Griswold, Director of the Cato Institute’s Center for Trade Policy Studies. “Our truck ban is just an exercise in raw power based on a stereotype of Mexicans.”
Beyond anti-Mexican bias, the bigger issue here is that Democrats are the Teamsters’ hit men. Since 1990, according to OpenSecrets.org’s campaign-donation database, the truckers’ union has paid $26,877,454 in legal bribes to federal candidates, 93 percent to Democrats. It also endorsed Barack Obama early. The Teamsters simply purchased protection from their Mexican competitors from the best parliament and president money can buy. If this hikes costs for U.S. consumers, shrinks markets for U.S. exporters, and creates new pitfalls in U.S.-Mexican relations, who cares? No matter what, Washington’s whores put out.
— Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University.
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