March 16, 2009 / 10:43 PM / 11 years ago

U.S. farm exports at risk over Mexico truck dispute

WASHINGTON (Reuters) - U.S. wheat, beef, rice and bean exports to Mexico face possible retaliatory duties in a dispute over whether Mexican trucks will be able to operate in the United States, Republican lawmakers said on Monday.

Mexico said earlier on Monday it would raise tariffs on 90 U.S. industrial and agricultural goods in reprisal for U.S. cancellation of a pilot cross-border trucking program. That program was intended to move the United States closer to implementing a commitment it made under the North American Free Trade Agreement.

“Because Congress has terminated the pilot program in violation of our NAFTA obligations, Mexico has announced that it will retaliate against us, as it is entitled to do, by increasing duties on $2.4 billion of U.S. exports of key commodities like wheat, beans, beef, and rice,” Representative Kevin Brady, a Texas Republican, said in statement.

Congress killed the pilot program, which allowed some Mexican trucks to travel long distances in the United States, in a 2009 appropriations bill recently signed by President Barack Obama.

“Unfortunately, this is a predictable reaction by the Mexican government to a policy that now puts the United States in clear violation of the North American Free Trade Agreement (NAFTA) and was inappropriately inserted into the Omnibus appropriations bill,” said Senator John McCain, an Arizona Republican.

Mexican Economy Minister Gerardo Ruiz said Mexico would soon publish a list of goods to be hit with the increased duties.

MEXICO A MAJOR GRAIN MARKET

Last year, Mexico was the top export destination for U.S. rice, the No. 2 destination for soybeans and the third largest buyer of U.S. wheat, according to U.S. Agriculture Department data.

White House spokesman Robert Gibbs told reporters the White House wanted to work with lawmakers, Mexican officials and the U.S. trade representative to come up with a new trucking scheme to replace the canceled program.

When it signed the North American Free Trade Agreement, the United States agreed to allow Mexican trucks to travel on U.S. highways beginning in 1995. Under a pilot program, a limited number of Mexican trucks were being allowed to drive beyond a zone near the U.S. border.

The recently passed legislation to fund most U.S. government operations through the rest of the 2009 fiscal year included an amendment by Senator Byron Dorgan, a Democrat from North Dakota, to kill the trucking program.

“Congress has opposed the (trucking) project in the past because of concerns about the process that led to the program’s establishment and its operation,” Gibbs told a briefing.

“The president has tasked the Department of Transportation to work with the U.S. trade representative and the Department of State, along with leaders in Congress and Mexican officials to propose legislation creating a new trucking project that will meet the legitimate concerns of Congress and our NAFTA commitments,” he said.

Gibbs said Dorgan had written the White House to “express his willingness to work with the administration in good faith to address this issue.”

Reporting by David Alexander and Doug Palmer and Noel Randewich in Mexico City; Editing by Eric Walsh

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