Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Another View of the Mexico - U.S. Trade Dispute

The San Francisco Chronicle has writen:

It's not a trade war yet, but there could be one unless Washington backs away from a ban on Mexican trucks crossing the border.

This dispute has the potential to worsen relations between two major trading partners, shred the North American Free Trade Agreement without a genuine debate, and contribute to barely restrained worldwide pressures to raise protectionist barriers during a global downturn.

I disagree.  There has been debate about the Mexican trucks and the dispute will not cause NAFTA to end up as a heap of shredded paper on the floor.

This dispute is real and has to be put in context - it demonstrates that NAFTA works.  A NAFTA panel has previously determined that the United States failed to meet its obligations under NAFTA.  Mexico has shown patience for over 10 years and, finally is taking retaliatory action.  This is allowed under NAFTA.  A country (e.g., the United States) has promised to liberalize trucknig services under NAFTA and has decided not to.  That same trading partner has faced a challenge under the dispute settlement procedures and has lost the challenge.  That Party gets to choose whether to comply with the provisions of NAFTA or face retaliation - the U.S has chosen to face retaliation.  A trading partner (e.g., Mexico) has decided to retaliate as permitted under the dispute settlement provisions.  The system works.

The problem is that the decision of the United States to cancel the previous compromise with  Mexico to allow approximately 100 Mexican trucks into the United States affects other American businesses.  However, retaliation often affects the innocent.  This is a problem with retaliation - but it is not the fault of the aggreived Party (Mexico in this case).  The blame rests on the Party who is not living up to its international obligations and who has made a decision to not comply with a decision of arbitrators.

This does not shred the FTA as a whole.  It only affects a small portion of the business that flows under the FTA.

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