Tariffs Mostly Spare State; WW&L Blasts U.S. Action (Touchpoints by Andrew Jensen)

 

Arkansas’ $796 million in exports to Mexico were largely spared by 90 new tariffs ranging from 10 percent to 45 percent imposed March 19.

Mexico slapped the tariffs on American goods in retaliation for a provision in the recently passed $410 billion omnibus spending bill that killed a pilot program to allow Mexican truckers access to U.S. highways, a requirement of the North American Free Trade Agreement.

Mexican truckers were supposed to have access to American highways by 2000, but so far only 98 trucks in the pilot program established in 2007 were permitted. The tariffs, which range from Christmas trees to toothpaste, affect $2.4 billion worth of American goods.

However, Mexico avoided adding tariffs on staples of its citizens’ diet, so large Arkansas exports such as rice and poultry were unaffected.

According to foreign trade statistics from the U.S. Census Bureau, Arkansas exported $267 million worth of chicken cuts and $421 million worth of rice in 2008. The state’s exports to Mexico grew by 47.5 percent from 2007-2008.

Mexico didn’t tax any heavy machinery, which would include Arkansas’ top export, aircraft parts ($1.35 billion in 2008).

Some Arkansas exports will be affected though. Copy paper, notebook paper and toilet paper were hit with a 10 percent tariff; soy sauce was assessed a 20 percent tariff and event tickets were given a 20 percent tariff.

Arkansas ranked 10th in the nation in 2007 with $428 million worth of soybean/soybean product exports. Exports of chemical wood pulp and polystyrene ranked Nos. 18 and 19 with $85 million in 2008.

The 20 percent event ticket levy is particularly noteworthy. Weldon Williams & Lick Inc. of Fort Smith, established in 1898, is one of the industry leaders in every variety from high-tech laser imprinted tickets to low-tech fold-and-rip raffle tickets.

WW&L CEO Jim Walcott took time out of his vacation to respond to a question about how his business would be affected, and was not pleased.

While not commenting directly about WW&L’s amount of business in Mexico, Walcott said 10 percent of the company’s sales are exports.

“If the people that are starting these trade wars could demonstrate at what point in America’s history any protectionism action has led to improvement in the life and liberty of all working persons in America, that would be of little consolation to the 10 percent of our employees whose livelihoods are now at risk by the special interest trade warriors,” Walcott wrote in an e-mail.

Walcott didn’t mention which special interest by name, but the Teamsters Union is a huge booster of the Democratic Party and was the biggest opponent of the Mexican trucking program. The Teamsters gave $2.4 million to Democrats in 2008 and $66,700 to Republicans.

“I am perplexed in the midst of the ‘financial crisis’ why we need to start another war unless it is simple political payback to the special interest that paid the most,” Walcott said. “I hoped we changed that last November.”

Despite commitments among all countries to avoid protectionism at a G-20 summit in November, Congress, Treasury Secretary Tim Geithner and Energy Secretary Steven Chu have managed to offend the European Union, China and now Mexico.

The EU heavily protested the inclusion of a ‘Buy American’ clause in the $787 billion stimulus and China — in addition to warning the U.S. to avoid devaluing the dollar through massive deficit spending — has talked openly of a trade war in response to Chu’s suggestion of a carbon tax on Chinese imports.

These events have free trade warriors concerned.

“We are concerned about this wave of protectionism,” said Massimo Gaspari of the Pescara (Italy) World Trade Center. “We hope they understand it’s the wrong way to go. In this crisis, now is the time to do some business.”