(April 14, 2009) In a recent letter to U.S. President Barack Obama, a coalition led by the California Chamber of Commerce Council for International Trade urged the administration to resolve the cross-border trucking dispute with Mexico while visiting that nation this week.
The California Coalition for Free Trade is supportive of the North American Free Trade Agreement (NAFTA) and understands that a 2001 dispute-settlement panel unanimously ruled that the blanket exclusion of Mexican trucking firms violates U.S. obligations under the NAFTA. Mexico’s retaliation for the U.S. refusal to implement the cross-border trucking provisions of the agreement has resulted in harm to California’s economy.
Mexico’s retaliation imposes tariffs on products from 40 states ranging from dental floss to Christmas trees. The targeted California agricultural products include 27 fresh and processed products worth $214 million in 2007, ranging from grapes to almonds. Mexico is California’s largest trading partner.
Protectionism Damages Economy
With a global recession, California stands to lose more than most states with moves toward protectionism. The coalition opposes unnecessary and trade-restrictive measures. California maintains its perennial position as a top exporting state and leads the nation in export-related jobs. California exports amount to more than $134 billion annually. A move to protectionism, such as barring trucks from Mexico, only invites retaliation from trade partners that negatively affects trade-related jobs in the state.
California is one of the 10 largest economies in the world with a gross state product topping $1.8 trillion. International-related commerce (including exports and imports of goods and services) accounts for approximately one-quarter of the state’s economy. Although trade is a nationally determined policy issue, its impact on California is immense.
California exports to more than 220 foreign markets. Trade offers the opportunity to expand the role of California’s exports. In its broadest terms, trade can literally feed the world and raise the living standards of those around us.
The coalition supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad, and elimination of disincentives that impede the international competitiveness of California business.
Further, the coalition opposes protectionism, which results in higher prices to the consumer for the specific product protected and in limited choices of products for consumers. Protectionism also violates trade agreements.
Benefits of Free Trade
The United States’ standing as a world leader depends directly upon its competitive success in the global economy. For more than half a century, the United States has led the world in breaking down barriers to trade and in creating a fairer and freer international trading system based on market economics and the rule of law. Increased market access achieved through trade agreements has played a major role in the nation's success as the world's leading exporter.
The coalition supports allowing California companies to compete more effectively in foreign markets, as well as to attract foreign business to California. Increased protectionism has not helped the U.S. economy in the past and it won't in today’s increasingly global economy.
Staff Contact: Susanne Stirling