Progress Slow in Tackling Trade Disputes Between U.S., Canada, Mexico

Variety of issues under examination at NAFTA meeting

Some progress has been made toward confronting Washington's "Buy American" provisions but a swift resolution to the trade dispute is unlikely, Canadian Trade Minister Stockwell Day said on Oct. 19.

"We've made some headway," Day said after talks with his U.S. and Mexican counterparts at a North American Free Trade Agreement meeting in Dallas, Texas. "It's not a sprint, it's a marathon," Day said.

The U.S. stimulus bill allocates $260 billion to states and cities provided that only American-made steel and equipment be bought with the funding. Ottawa has been hoping the Obama administration would make an exception for Canadian goods in return for a guarantee that city and provincial bids would be open to U.S. firms.

Day also said that the strengthening of the Canadian dollar -- partly arising from his country's "boring but stable" banking system that eluded the U.S. banking crisis -- posed a further challenge to exporters north of the border.

He quoted analysts as saying it could reach parity with the U.S. dollar by the end of the year.

Regarding U.S.-Mexican trade relations, U.S. Trade Representative Ron Kirk said American exporters -- particularly in California's agriculture sector -- have been feeling the impact of retaliatory tariffs Mexico implemented after U.S. legislators cut funding to a program allowing Mexican trucks to operate in the United States.

Mexico said it would impose import duties on 89 items, from grapes to toilet paper, but Kirk said not all of the threatened tariffs have been implemented. "The Mexicans were very shrewd by how they targeted (U.S.) imports," he said at a press conference.

Mexico's Secretary of Economy Gerardo Ruiz Mateos sidestepped a question asking if Mexico might lift the tariffs in advance of any resolution of the cross-border trucking issues. He noted that Transportation Secretary Ray LaHood was meeting with Mexican Transportation Secretary Molinar Horcasitas in Washington soon to discuss the problem.

Asked if narco-violence in northern Mexico was hurting regional trade, Ruiz Mateos said that the Mexican government was taking measures to restore stability while introducing high-tech equipment at crossing points that not only can detect contraband and guns in truck trailers but also greatly reduce transit time from "four hours to 10 minutes."

The U.S., Mexico and Canada did, however, agree to look into streamlining regulatory differences to boost trade as part of a workplan for enhancing "competitiveness, strengthening institutions, and communications and transparency" under NAFTA.

"Since all tariff cuts under the agreement have been implemented, we asked officials to pursue cooperation in other areas, including reducing unnecessary regulatory differences to ensure the free flow of goods, services and capital through modern and efficient borders," said a statement issued after the meeting. "This forward-looking workplan should draw upon the work already underway, as well as incorporate new elements, developed in consultation with all relevant stakeholders," it added.

The ministers also agreed to establish an ad hoc working group to explore cooperation on protecting the environment. They wanted an agreement "at the working level" by early next year for liberalization of NAFTA rules to step up trade on environmental goods.

Copyright Agence France-Presse, 2009

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