The Wall Street Journal
By ELIZABETH WILLIAMSON and DAVID LUHNOW
August 8, 2009

www.wsj.com

Summit Will Discuss ‘Buy American’ Trade Provisions

President Barack Obama will travel to Mexico on Sunday to attend his first summit with his Canadian and Mexican counterparts, in a meeting that the latter hope will shed light on how the U.S. plans to address trade disputes involving Mexican trucks and "Buy American" provisions seen as favoring U.S. companies.

Mr. Obama, Mexican President Felipe Calderón and Canadian Prime Minister Stephen Harper are slated to touch on a wide range of topics in the two-day North American Leaders’ Summit, including economic, energy, climate and security issues.

Canadian and Mexican officials said their countries will focus on trade, with Messrs. Harper and Calderón closely gauging Mr. Obama’s response to disagreements over "Buy America" provisions in the U.S. economic-stimulus plan, and Washington’s ban on Mexican trucks operating in the U.S.

The officials said Mr. Obama’s positions on those issues could serve as a bellwether of the president’s broader attitude toward Canada and Mexico, the U.S.’s first- and third-largest trading partners.

Under the North American Free Trade Agreement, the U.S. is required to allow Mexican trucks to cross the border into the U.S., but U.S. trucking companies and other critics have opposed such a move, arguing Mexican trucks aren’t safe. A pilot program allowed a small number of Mexican trucks to ply U.S. highways, but Congress killed that program in March following lobbying by the Teamsters Union, which represents U.S. trucking companies, among others.

Mexico retaliated by slapping an estimated $2.4 billion in tariffs on 89 industrial and agricultural products, ranging from potatoes and pears to precious-metals jewelry. Mexican truckers are also suing the U.S. under the NAFTA trade deal for $6 billion in compensation.

Mexican trucks shipping goods into the U.S. now must stop at the border to allow the goods to be reloaded onto U.S. trucks. The U.S. Chamber of Commerce estimates that this process adds about $400 million to the cost of U.S. imports from Mexico each year.

White House spokesman Robert Gibbs declined to discuss U.S. negotiations on the issue in advance of the summit. "We don’t expect to announce anything big coming out of this weekend," he said.

Transportation Department spokesman Sasha Johnson said, "We continue to work to find a solution that addresses the concerns of Congress and is consistent with our international obligations."

Canadian officials said they plan to raise "Buy American" legislative provisions that it worries could exclude Canadian companies from construction projects receiving economic-stimulus funding. The U.S. steel and building-materials industries have pressed to retain those provisions, which favor U.S. vendors and contractors for certain materials and labor in some stimulus-funded projects.

"The president insisted that whatever ‘Buy American’ provisions were put into the stimulus bill be consistent with our international obligations," Michael Froman, deputy national security adviser for international economic affairs, told reporters on Thursday. He said the U.S. was in talks with Canada and other trading partners about how to "implement the ‘Buy American’ provision in a way consistent with the law, consistent with our international obligations, while minimizing disruption to trade."

The three leaders are also expected to discuss cooperation on economic-recovery efforts, climate change and energy. Other topics on the agenda include how to control the spread of the H1N1 flu virus, which is believed to have originated in Mexico, and how to assist the Mexican government combat escalating violence among warring narcotics traffickers.

The North American Leaders’ Summit has been held annually since 2005, with the aim of promoting cooperation among the countries on a variety of issues.

Write to Elizabeth Williamson at elizabeth.williamson@wsj.com and David Luhnow at david.luhnow@wsj.com

Printed in The Wall Street Journal, page A9