On March 16, Mexico announced it was slapping 90 new tariff measures on U.S. exports. The move came in retaliation to the U.S. Congress’s March 10 decision to retire a pilot program that allowed Mexican truckers the privilege of plying hallowed American highways. The tariff measures, which were to come into effect on March 19, will apply to a range of U.S. goods — from sunglasses to wine. Mexico estimates the tariffs represent US$2.4 billion in lost export value to the United States.
This set-to, plus the ongoing fuss over Buy American, reveals that the loopholes in NAFTA are big enough to drive a now-illegal Mexican truck through. Buy American itself exploits those loopholes to do an end-run around the spirit of the treaty — without the hassle of actually renegotiating it.
At the upcoming G20 talks, Prime Minister Stephen Harper has vowed to put forward a strong anti-protectionist message. (So will others: according to Gary Hufbauer of the Peterson Institute of International Economics in Washington, none other than President Barack Obama is expected to add his voice to the anti-protectionist choir.) But why stop there? Rather than continue to futz with NAFTA, Harper should push other G20 leaders to revive the stalled Doha round of multilateral trade talks at the World Trade Organization.
This would be in keeping with the spirit of a new report from the Organisation for Economic Co-operation and Development. In Globalisation and Emerging Economies, OECD trade and agriculture director Ken Ash argues that reviving multilateral talks would help major emerging economies build on their progress of the past 20 years — and get out of this crisis with their trade performance strengthened.
The report shows that Brazil, Russia, India, Indonesia, China and South Africa — the so-called BRIICS — have significantly reduced their border protection and expanded exports much faster than the leading developed countries. But a “second generation” of reforms is now needed: reducing remaining tariff barriers, updating domestic regulations that unduly impede trade and further opening service sectors. Reviving the Doha round remains the best way to achieve that.
Stronger BRIICS mean more robust markets for exporting nations like Canada and Mexico. And that, surely, would be a more productive outcome than squabbling over sunglasses and semis.