One of the things the G20 did seek a common ground on was guarding against a "beggar thy neighbor" form of trade protectionism. However, don't expect much from the Obama Administration on behalf of free trade. Obama used long-overdue trade pacts with Colombia and South Korea, two of America's strongest allies, as political scapegoats during the Presidential campaign. And in the recently passed stimulus bill there was protectionist language in favor of "Buy American" or against H1B's (foreign knowledge workers).
One little-noticed provision in the stimulus bill involved the Democrats delivering on an IOU to the Teamsters by killing funding for a pilot program involving some 27 Mexican truckers (in violation of NAFTA: by 2000, Mexican truck drivers were to be given access to drive trucks across the US). (Mary Anastisa O'Grady has an excellent summary of the facts in today's column entitled "Washington Starts Another Trade War".)
The pretext is a straw man created by the labor unions and their crony politicians regarding Mexican truck safety. In fact, Ms. O'Grady makes a strong case that the Mexican truck drivers actually have comparatively better driving records. This trade restriction, of course, has the net effect of reducing competition and thus enabling higher delivery costs.
Tonight the Wall Street Journal reports that Mexico intends to respond by imposing tariffs against 90 American goods to be announced. This is a troubling development, and the Obama administration is apparently looking at trying to correct the problem in Congress. However, this is yet another issue (like earmarks) where the Obama Administration failed to take a proactive stance with Congressional leadership.
