The Custom-House

Mexicans keep on trucking for now

Before 1982 Mexican truckers enjoyed access to U.S. highways.  But lack of Mexican reciprocity led the U.S. to impose restrictions on that access.

These reciprocal access issues were supposed to have been resolved by NAFTA.  In 1994 and 1995 the U.S. began to implement a phased extension of the existing restricted Mexican access.  In the first phase, Mexican truckers would be allowed work in California, New Mexico, Arizona, and Texas.  Later they would be allowed access to the rest of the U.S.

However, Clinton backed off in 1995 and suspended the reintroduction of Mexican truckers.  This was either because of safety and environmental concerns or protectionist lobbying.  The reason will depend on who you talk to. Efforts to resolve the situation continued and in September 2007 the U.S. Department of Transportation (DOT) was ready to implement a limited, one-year, demonstration project to allow Mexican truckers nation-wide access.

Applying countervailing duties to non-market economies (especially China)

The Congressional Research Service has released a report by Vivian Jones on Trade Remedy Legislation: Applying Countervailing Action to Nonmarket Economy Countries (December 6, 2007). 

Countervailing duty law allows the U.S. to impose tariffs on imports in certain circumstances to offset subsidies received by a foreign firm.  Countervailing duty actions haven't been taken against non-market economies because of the difficulties of estimating subsidies in the absence of markets.  China is a non-market economy - but not like it once was, and last year the ITA decided that it could tease out relevant subsidies in the case of coated free sheet paper.

Jones reviews the background to this issue, and surveys recent Congressional and Admininstrative actions.  Here's the abstract:

The Port of Salalah, Oman

Robert Wright, the Financial Times transport correspondent, boarded the container ship Pearl in Salalah, Oman, and rode it to its destination in Zeebrugge, Belgium.  At Salalah, the Pearl was midway in a trip from Singapore to Zeebrugge.  He reported on his trip here: The engine of trade (January 19, 2007.

Wright talks about the diverse crew, and challenge faced by the ship's officers - apparently successfully - in managing the differences, the training of merchant marine cadets, the responsibilities of the first mate, and more.  I'm only going to pull out his paragraphs on the Port of Salalah:

Will the Columbia FTA debate destroy the idea of "fast track"?

It's customary for the Administration to get the approval of the Congressional leadership before submitting an agreement negotiated under trade promotion authority (fast track) for ratification.  Bush Administration leaders are debating whether or not to submit the pending trade agreements with Columbia, Panama, and Korea without that approval if necessary (Will the Bush Administration "Force" Congressional Action?, The Custom-House, January 12, 2008)

The Columbia deal is widely expected to come up first, and will be controversial because of human rights issues.  Doug Palmer reports on concerns that, if the Administration pushes ahead on Columbia, without getting the signal from the Congressional leadership, the fast track concept may end up wrecked for all time, as a trade policy tool: Colombia trade fight could cripple US fast track (Doug Palmer, Reuters, via the Guardian, January 18, 2008).

"The Case Against Reforming the WTO Enforcement Mechanism"

Simon Lester over at the International Economic Law and Policy Blog reports (Public International Law and Economics, January 14, 2008) that the Illinois Law Review has published the papers from a December 2006 symposium on "Public International Law and Economics."   There are an introduction, eight papers and, in many cases, comments on the papers - all online.

Jide Nzelibe of the Northwestern School of Law, argues against reforming the WTO's procedures for enforcing trade commitments made by its members:

"In The Case Against Reforming the WTO Enforcement Mechanism, Jide Nzelibe refutes two leading proposals for altering WTO enforcement. He argues that both “incentive-compatible” and “user-friendly” enforcement reforms threaten to introduce dangers of its own which outweigh the problems of the present enforcement mechanism.  Comments by Ernst-Ulrich Petersmann and Christian Tietje follow."

Cuban Embargo Relaxation Bill

Senate Finance Chairman Max Baucus along with other legislators introduced a bill in June to reform various elements on the Cuban embargo: Promoting American Agriculture and Medical Exports to Cuba Act of 2007 (S. 1673) .

The bill would:

1. clarify the payment terms under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) and authorize direct transactions between U.S. and Cuban banks  [the TSREEA provided opportunities for U.S. agricultural exports to Cuba.  Following passage of the legislation, these rose to over $300 million a year.  However, as discussed below, the interpretation of regulations on payment for agricultural products acts to restrict additional exports]
2. establish an agricultural export promotion program to support U.S. firms seeking to market to Cuba
3. express the sense of Congress that visas should be issued to Cubans traveling to the U.S. on business related to agricultural exports
4. repeal a prohibition on enforcement of rights to certain U.S. intellectual properties and transfer of such properties (I'm not clear about what's intended here)
5. liberalize restrictions on travel by U.S. citizens to Cuba
6. liberalize restrictions on export of medicines to Cuba
7. increase in airport tax for travel to Cuba by one dollar?

Note that the bill only provides for limited relaxation of the embargo.  Much of it would remain in place. 

Does FINSA Cover Banks?

Nicholas Rummell says to expect "Sovereign funds to get more attention in D.C." (Financial Week's "After the bell " column, January 11, 2008). 

Last year Congress reformed the process the U.S. uses to review foreign direct investments for national security implications (Foreign Investment and National Security Act of 2007 - FINSA).  Look at my CFIUS archive for links to this history of this, and to analysis of FINSA's implications (CFIUS stands for Committee on Foreign Investment in the U.S. - the interagency committee that reviews investments). I posted here on implementing the reforms: What's left on CFIUS Reform? (Jan 6).

Rummell says to expect:

• Much of his note discusses the potential application of CFIUS to sovereign wealth fund investments in investment banks. "The committee typically examines companies involved in defense or infrastructure where there could be a national security threat, but with banks such as Citigroup and Merrill Lynch seeking additional capital from sovereign wealth funds, it could soon be probing Wall Street bailouts as well.  New guidance expected in the spring will delineate whether banks also fall under CFIUS’ jurisdiction."
• "Meantime, Sen. Christopher Dodd (D-Conn.) plans to hold hearings on the role of sovereign funds in U.S. capital markets, a staffer on his banking committee said."
• "...the Government Accountability Office is examining sovereign funds to determine the size, location and types of investments such funds make, as well as whether applicable laws and regulations, including CFIUS requirements, are adequate to protect U.S. market stability."

"Blue-Collar Blues"

The Peterson Inssitute has released a new book on trade and inequality by Robert Lawrence: Blue-Collar Blues: Is Trade to Blame for Rising US Income Inequality? (January 2008).  Here's the abstract:

Tanker security

Terrorists can attack tankers a number of ways.  This December Government Accountability Report lays them out: Federal Efforts Needed to Address Challenges in Preventing and Responding to Terrorist Attacks on Energy Commodity Tankers .

No evidence that exchange rate flexibility speeds current account adjustment?

File this under "everything you know is wrong."

Menzie Chinn asks, Do We Really Know that a Flexible Exchange Rate Regime Facilitates Current Account Adjustment? (Econobrowser, January 7, 2007).  In the post he points to work co-authored by Shang-Jin Wei and a post by Wei at VoxEU.