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Mexico Trucking Retaliation
On October 21, 2011 Mexico removed all remaining retaliatory duties on the U.S. after the first Mexican trucking company was certified for operation under the Cross-Border Trucking Program.
On July 6, 2011 the U.S. and Mexico signed a formal agreement allowing Mexican trucks to operate in the U.S. as part of a pilot program. Mexico reduced the retaliatory duties by 50 percent effective July 8, 2011. The remaining duties were to be eliminated once the first Mexican trucking company is granted the authority to operate in the U.S. This became effective on October 21, 2011.
Previously on March 16, 2009 Mexico announced it would retaliate against the United States for the cancellation of the Cross-Border Trucking Demonstration Program. The list of 89 products was published on Wednesday, March 18, 2009 and effective the next day. On August 18, 2010 Mexico revised the list to include 99 products.
Background: Under the NAFTA, the United States and Mexico agreed to phase-out restrictions on cross-border passenger and cargo services. In 1995, however, the United States announced it would not lift restrictions on Mexican trucks. In 2001, a NAFTA dispute settlement panel found the U.S. restrictions to be in breach of its NAFTA obligations.
In 2007 Mexico agreed to cooperate in a joint demonstration program as a step towards full NAFTA implementation. It allowed up to 100 trucking firms from Mexico to transport international cargo beyond the commercial zones along the U.S.-Mexico border and up to 100 U.S. trucking firms to transport international cargo into Mexico. Bus companies and hazardous material carriers were excluded. The Trucking Pilot Program began on September 6, 2007, and was originally designed to run for one year. By an exchange of letters between the U.S. and Mexican Transportation Secretaries on August 4, 2008, the Trucking Pilot Program was extended up to an additional two years to ensure that it could produce sufficient data to evaluate its safety impact. However, the omnibus spending bill, which President Obama signed into law, ended funding for the program in 2009.
On March 18, 2009, Mexico took retaliatory measures, consistent with its NAFTA obligations, against the United States for the cancellation of the Department of Transportation’s cross-border long-haul trucking program. The announcement raised tariffs on 89 different products ranging from agriculture goods to jewelry on U.S. exports valued at $2.4 billion (2008 value). Mexico decided to revise the list of affected products on August 18, 2010. The list totaled 99 products up from 89 on the original list, with affected U.S. exports valued at $2.03 billion (2009 value) with tariffs ranging from 5-25 percent. 16 products were dropped from the original list and 26 products were added to the revised list. On July 6, 2011 the U.S. and Mexico signed a formal agreement allowing Mexican trucks to operate in the U.S. as part of a pilot program, which resulted in Mexican government phasing out the retaliatory tariffs. All retaliatory duties were removed on October 21, 2011.
U.S.-Brazil WTO Dispute over U.S. Cotton
Brazil and the United States have been working to find a resolution through the WTO dispute settlement process since 2002 over issues related to U.S. support measures that benefit upland cotton. On June 17, 2010, Brazil and the United States reached agreement on a Framework under which Brazil would not impose retaliatory duties on a broad list of U.S. exports. The Framework outlines a schedule under which Brazil and the United States would continue discussions relating to elimination of trade-distorting cotton subsidies in the successor legislation to the 2008 Farm Bill. Additionally, the Framework outlines a review and adjustments to the United States’ current GSM-102 Export Credit Guarantee Program. This Framework agreements does not provide for a permanent solution to the dispute, but avoids the implementation of Brazilian retaliatory duties while outlining a path towards a mutually agreed upon solution.
As a result of its finding the U.S. cotton support payments are inconsistent with U.S. WTO obligations, in November 2009 the WTO Dispute Settlement Body authorized Brazil to retaliate against the United States by suspending concessions on more than $800 million trade. On March 8, 2010, Brazil announced a list of U.S. products upon which it would retaliate. The list contained 102 products, upon which duties of between 12 to 100 percent would be imposed. The original imposition of these duties was delayed by the signing of a Memorandum of Understanding (MOU) that establishes a fund for technical assistance and capacity building related to the cotton sector in Brazil.
On October 28, 2000, the United States Congress passed the Continued Dumping and Subsidy Offset Act of 2000 (a.k.a., the Byrd Amendment), which amends Title VII of the Tariff Act of 1930. The Byrd Amendment redistributes on an annual basis anti-dumping duties, countervailing duties or any other finding under the Antidumping Act of 1921 to affected producers who were petitioners in the original antidumping /countervailing duties cases. Eleven WTO members (Australia, Brazil, Canada, Chile, the European Community (EC), India, Indonesia, Mexico, Japan, South Korea, and Thailand) challenged the U.S. implementation of the Byrd Amendment in the WTO. The WTO Dispute Settlement Body panel (and the Appellate body) found the Byrd Amendment incompliant in January of 2003 and requested that the United States bring its law into compliance by the end of the year (December 27, 2003).
The United States did not repeal the amendment by the WTO deadline. Brazil, Canada, Chile, the EU, India, Japan, Mexico and South Korea requested and were granted authorization from the WTO to suspend tariff concessions and other obligations against the United States. Canada and the EU began retaliating against U.S. exports on May 1, 2005, imposing an additional 15 percent duty on U.S. products. There were 18 products on the EU list and eight products on the Canadian list. Mexico joined Canada and the EU on August 18, 2005, levying additional duties that ranged from 9 to 30 percent on 10 products from the United States. On September 1, 2005, Japan began to retaliate with additional 15 percent duties on 15 products.
In February 2006, the United States repealed the Byrd Amendment effective October 1, 2007. Canada and Mexico ceased retaliatory tariffs against the United States in 2006. While duties are no longer collected under the Byrd Amendment, distributions of previously-collected duties continue. The EU and Japan continue to apply retaliatory tariffs on U.S. exports listed on product lists published annually. In 2006, the EU expanded its retaliation list from 18 products to 26 products, applying a retaliatory tariff of 15 percent. In 2007, the EU further increased its list of targeted products from 26 to 58 products. In 2008, the EU reduced its product list from 58 to 28 products, and Japan reduced its retaliation by lowering its retaliatory tariff to 10.6 percent and applying it to only two products. Effective September 1, 2010, Japan reduced its retaliatory tariff on those two products to 4.1 percent.