South of the Border

Free Trade

Well, that didn’t take long. Two months into the Obama administration, Mexico slapped tariffs on 90 U.S. agricultural and industrial goods in retaliation for Washington’s cancellation of a pilot program that allowed Mexican trucks to transport cargo across America. The move was fervently cheered by unions, which provided Obama with significant backing during the presidential election.

Trouble is, Obama’s move violates the North American Free Trade Agreement, which was passed in 1994 and was designed to open up trade between the United States, Canada, and Mexico. NAFTA has been a big success in knocking down costly trade barriers between the three nations, as well as reducing prices for everything from machine parts to fruits and vegetables. Mexico’s Economy Minister Gerardo Ruiz Mateos says the White House move was “wrong, protectionist, and clearly violates” the treaty.

While the White House says it will work with the Mexican government to develop a new plan in cooperation with Congress, we have our doubts. Canada, worried that it could be in line for added trade barriers, is working hard to set up new trading agreements with Europe that bypass the United States. Obama has also said he’s opposed to trade deals with Korea and Colombia. Such protectionism could hurt us.