Friday, March 20, 2009

Mexican Truck Dispute Gets Nasty

The trade dispute over trucks from Mexico has ripened.

Despite efforts to avoid it Mexico will start adding duties on the following products

Christmas trees20%
Peeled onions20%
Soy sauce20%
Soup, broth and stew mixes, and prepared stew, broth and soups10%
Mineral water20%
Sunflower seeds15%
Products for manicures and pedicures15%
Deodorants and anti-perspirants15%
Statuettes and other decorative articles20%
Curtain rods20%
Coffee makers20%
Waste from batteries, rechargeable batteries, chargers20%

As the Global economy slows there is real likelihood of trade antagonism growing. Is this just another step toward a 1930's style global depression? Let's hope not.

Tuesday, March 17, 2009

Trade Wars on The Horizon.

Mexican Trucks:
Yesterday Mexico declared it intended to use NAFTA trade remedies due to the failure of the US to open its borders to Mexican trucking companies.

The administration is trying the put together a coalition to draft the necessary legislation but the move is opposed by many in the US who do not want Mexican trucks to compete. If a solution is not made soon many US exports to Mexico could be in jeopardy of punitive tariffs.

Next Week the WTO is hearing comments on what remedies the EU and others can inflict on US exports in retaliation to the use of "zeroing" when making anti-dumping calculations.

Countervailing Duties:
In October 2007 the commerce department made its final determination that countervailing duties on imports of coated paper from the China were warranted. However, the International Trade Commission, a panel, made a final determination that US Industries were not being injured. So the application of countervailing duties on products from China did not occur.

However, since then four products from China have been taxed with countervailing duties. More cases are being added to the rolls. Just recently the People Republic of China was not allowed to intervene the case challenging the countervailing duties of tires from China.

With the new administration and the growth of these countervailing cases it appears as if a larger roll for countervailing cases is on the trade horizon. This will be further complicated with government intervention into more parts of the economy. The bailout of the auto industry for example will likely call many trading partners to claim there is an unfair government subsidy of a US export.