The jury is still out on the 'Buy American' provisions in Washington's recent stimulus bill. EU and Canada anxiety was placated by assurances that the provisions would be made compliant with America's obligations under international trade agreements. But faith in America's willingness to be compliant will be shaken by Congress' decision to ban Mexico's trucks. The decision is a snub to a 2001 court judgment that the trucks were entitled to use American roads under the North American Free Trade Agreement.
The ban was a victory for one of the most powerful members of the Democratic Party's coalition - the International Brotherhood of Teamsters labour union (which represents American truckers).
Mexico retaliated by, reports Bloomberg, slapping $2.4bn of import tariffs on 90 goods from 40 US states.
Brazilian President Luiz Inácio Lula da Silva told the Wall Street Journal that a rising wave of protectionism by rich nations like the USA threatened the world's emerging economies. He vowed to lobby Barack Obama to adopt a free-trade deal with Colombia. It is encouraging to see a developing world leader adopt such an enlightened stance.
Mexico cannot afford the extra economic damage that America's protectionism means. The Mexican state is already struggling to afford a war with its increasingly powerful drug cartels. Foreign Policy magazine recently reported the scale of Mexico's law enforcement challenge:
The Bush administration had been increasing aid to Mexico's security services. The Obama administration risks taking relations in the other direction.
