MEXICO CITY (Reuters) - Mexico on Monday expanded the list of U.S. products subject to retaliatory tariffs as it steps up pressure on Washington to settle a long-running dispute that has kept Mexican long-haul trucks off U.S. roads.
The government of President Felipe Calderon was infuriated last year when U.S. lawmakers voted to cancel funding for a pilot begun under U.S. President George W. Bush allowing long-haul Mexican trucks to circulate in the United States.
Under the North American Free Trade Agreement (NAFTA), which took effect in 1994, the United States agreed to open its market to Mexican trucks. Mexico said the United States was not living up to its end of the deal and retaliated by imposing duties on a long list of U.S. exports, including fruit, vegetables and industrial goods.
Mexico’s Economy Minister Bruno Ferrari said despite the clampdown on certain U.S. products, negotiations were still stalled, forcing Mexico to take new action.
“Mexico has not received a formal proposal to resolve this situation, which is affecting Mexican truckers and has hurt trade and competitiveness in North America,” Ferrari said.
“We are not delaying this any more. This cannot continue,” he told a news conference.
Ferrari said the new list will be published in Mexico’s Official Gazette this week and a source at the economy ministry said it could be on Thursday.
Mexico’s embassy in Washington said the revised list will include 99 products, up from 89 currently.
U.S. business groups say the dispute has threatened thousands of U.S. jobs and hit bi-lateral trade.
U.S. Transportation Department spokeswoman Olivia Alair said the agency was “developing a new proposal” that would meet U.S. commitments under NAFTA and address concerns raised in Congress about Mexican long-haul truckers.
“Mexico is an important U.S. export market and President Obama understands the economic pain that these tariffs cause for American farmers, companies and workers,” U.S. Trade Representative Ron Kirk said in a separate statement.
U.S. manufacturers and farm groups expressed frustration that Obama has taken so long to find a solution.
Congress terminated the trucking program on the basis of safety concerns, critics accuse lawmakers of bowing to protectionist pressures from the U.S. Teamsters union.
“The basic underlying issue has not changed in that the U.S. has violated the terms of a trade agreement and thousands of U.S. manufacturing jobs are at risk if the Administration and Congress don’t take the necessary steps toward compliance,” said Doug Goudie, director for international trade policy at the National Association of Manufacturers.
U.S. PORK EXPORTS HIT
The plan is to remove certain U.S. products and add others, including pork, without significantly changing the total value of trade from around $2.5 billion, a limit stipulated by the North American Free Trade Agreement.
Ferrari said Mexico will keep revising the list to affect a broader spectrum of goods. The aim is to pressure U.S. businesses to push for government action.
Ricardo Alday, the spokesman for Mexico’s embassy in Washington, said pork was one of the 54 U.S. agricultural items that would be on the revised list, although it was not clear what specific pork products would be included.
The National Pork Producers Council said it had been urging the Obama administration to work with Congress to resolve the issue and was disappointed by the lack of progress. The council said the retaliatory tariff was unlikely to be high enough to stop the flow of exports to Mexico, its No. 2 market by value.
“With current prices of various pork cuts being so high, any extraneous event that can affect demand is going to be significant,” said Dan Norcini, an independent hog trader.
In addition to pork, several agricultural and food items would be added to the list, including some cheeses, sweet corn, oranges, grapefruits, chewing gums, ketchup and some chocolates, an official familiar with the details said. Only one agricultural item would be removed: peanuts.
Several manufactured items would be removed, including telephone equipment, metal furniture, certain textiles and paper products, locks and some carpets, said the official.
Ferrari said the aim was to slap tariffs on goods that would not affect Mexican consumers’ basic basket of food items or hit Mexican industry. The idea is to affect products that come from all across the United States, he said.
Additional reporting by Roberta Rampton, Doug Palmer and John Crawley in Washington and Jerry Bieszk in Chicago; Editing by David Gregorio
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