Learning Lessons From Trade Dispute Votes in Congress
Recently, the Obama Administration announced that U.S. and Mexican negotiators finalized a program that will allow Mexican trucks carrying imported goods to travel throughout the U.S. to their destinations, a promise made by the U.S. eighteen years ago and codified in the North American Free Trade Agreement (NAFTA). The accord was reached 2 years and 3 months after Mexico, legally under NAFTA, applied tariffs of between 10 and 45 percent on 89 U.S. products totaling $2.4 billion.
The retaliation by Mexico was the result of language added to the FY 2009 Omnibus Appropriations bill in the U.S. Senate that ended federal funding of a pilot program initiated under the Bush Administration between 2007 and 2009. The pilot program was heavily scrutinized by the democratically-controlled Congress. Earlier, on September 11, 2007, the U.S. Senate held two votes on amendments to the Transportation Appropriations bill that prohibited the Department of Transportation from providing funding to implement the Mexican trucking pilot program. Both votes were overwhelmingly supported by 75 and 69 Senators, respectively.
Deja Vu All Over Again
Reminiscent of this unnecessary trade dispute with Mexico that resulted in retaliation against U.S. products, recent action in the U.S. House of Representatives could be setting the U.S. up for another round of unnecessary retaliatory measures. The U.S. House of Representatives did a major about-face from a similar vote cast just four months earlier (Kind Amendment No. 89, to H.R. 1, Feb 18, 2011, failed 183-246), and on June 16, supported 223-197 an amendment to the Agriculture Appropriations bill that prohibits the U.S. from paying an agreed-upon annual payment of $147.3 million to the just-established Brazilian Cotton Institute, an organization recently described by the International Center for Trade and Sustainable Development as “finalizing its operating structure.”
Under a Framework Agreement reached in June 2010, as long as the U.S. continues its annual pay-off of $147.3 million to the Brazilian Cotton Institute, Brazil agreed not to proceed with retaliatory measures against the U.S. on more than $829 million of U.S. goods annually. The ability for Brazil to retaliate against U.S. products stems from an earlier (August 2009) trade dispute brought and won by Brazil against U.S. cotton subsidies in the World Trade Organization (WTO , http://ow.ly/5rife). WTO rules allow the Brazilian government to retaliate against the U.S. As a last resort, Brazil may also restrict U.S. intellectual property (IP) rights (patents & copyrights). Brazil initiated and won the dispute over the current marketing assistance loan (MAL), counter cyclical payment (CCP), and export credit guarantee programs. Each program is popular among U.S. agricultural producers and have been staples in U.S. agricultural policy for decades.
While different trade disputes, there are some interesting parallels between the two including:
• Each dispute triggers retaliatory measures against multiple U.S. products totaling billions of dollars,
• U.S. Trade Representative Office and US Department of Agriculture’s trade negotiators continue to be undermined in bilateral discussions,
• U.S. credibility is jeopardized, not only in bilateral talks, but regional trade negotiations and in the WTO, and
• The negative impacts on U.S. business amidst a dismal economy.
House Renege = Retaliation
Congressional members gave little-to-no consideration to the above parallels in recent and historic votes on these trade issues. Consider, in June of this year the U.S. House of Representatives overwhelmingly adopted (considering the about-face from February to June) the policy position to end the annual payments to Brazil. Similarly, in 2007 and 2009 the U.S. Senate voted overwhelmingly to prohibit access to U.S. roadways by Mexican trucks. Moreover, the President, then-U.S. Senator from Illinois, supported the prohibition on Mexican trucking.
Fortunately, after over 2 years of high tariffs imposed on U.S products the Mexican trucking issue may be coming to a conclusion. But during floor debates on these particular trade disputes, the business community was thrown under the policy bus. Public safety and budget woes took priority over retaliation on $2.4 billion and $829 million of U.S. products, respectively.
Business Community Needs to Step Up
During deliberations on FY 2012 appropriations it is unlikely the U.S. Senate will take up the provisions to end the annual U.S. pay-off to Brazil, but the business community needs to be better prepared to address the issue where it really counts – in the 2012 Farm Bill. The business community should brush up on their farm policy so, like in the Mexican trucking trade dispute vote in the Senate, they are not thrown under the farm policy bus and trumped again, this time by popular farm programs in rural states that are argued to help produce an affordable, safe and abundant food supply.
Cansler Consulting is an experienced lobbying firm that can use our expertise in agriculture, federal budget, trade negotiations, and our relationships on Capitol Hill to help you influence the policy makers re-authorizing the Farm Bill, so that it is written to remove the current financial threat to your organization.
Cansler Consulting is an experienced lobbying firm in agricultural, rural healthcare, and energy policies and through our Congressional relationships we can help you influence the policy makers on Capitol Hill. You can contact us at [email protected] or at (202) 220-3150.
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