“If at first you don’t succeed, try, try again,” said the comedian W.C. Fields. “Then quit. No use being a damn fool about it.”
That’s sound advice in a lot of situations. You can only bang your head against a wall for so long. Then you risk brain damage.
Sometimes the stakes are so high, however, that quitting really isn’t an option–and it becomes necessary to try something different to achieve the same goal, like climbing over the wall instead of knocking it down.
That’s what American trade negotiators decided last month when they filed a complaint against Mexico before the World Trade Organization. The dispute over Mexico’s high tax on soft drinks made with high-fructose corn syrup has gone on for too long. America’s farm economy already is losing about a $1 billion annually. The time has come for our government to finally abandon diplomatic delicacies and play hard ball with a country that has allowed special interests to flout free and fair trade policies. Raising the issue with the WTO isn’t so much “trying again” as it is the logical next step in a costly quarrel.
The problem began nearly a decade ago, when Mexican politicians began trying to block corn sweeteners from their markets. In the early days of 2002, they slapped a 20-percent tax on soft drinks not made with cane sugar. It was a protectionist sop to the Mexican sugar-cane industry, which can’t compete against American producers of high-fructose corn syrup. Given that Mexicans drink more soda per capita than any other people in the world, this decision has had a calamitous impact on the United States.
The Corn Refiners Association estimates that in a free-trade environment envisioned by the authors of NAFTA, Americans would sell about two million metric tons of high-fructose corn syrup to Mexico each year. The total value of this transaction would come to $620 million in exports and $300 in corn sales. Additional losses are harder to calculate, but they include purchases that haven’t been made in seed, fertilizer, and farm machinery.
NAFTA and WTO panels already have ruled against Mexico on this issue, in cases filed by American corn producers and refiners. Yet these were empty victories because they did not lead to any true reforms. The hope now is that the U.S. government will force positive change, because the WTO has the power to sanction reprisals–i.e., the United States may be granted permission to impose tariffs on certain Mexican products.
When the WTO ruled against U.S. steel tariffs some months ago, in a case initiated by the Europeans, we saw firsthand how the threat of trade reprisals compelled Washington to reverse course. The Europeans were granted permission to tax American products – equal in value to the illegal U.S. steel tariffs. Before they did so, however, they published a list of products they meant to tax–each one affecting a vital constituency in a political swing state. In other words, if the White House had not abandoned its steel tariffs, the Europeans would have adopted measures aimed specifically at hurting President Bush’s re-election prospects in November 2004.
In one sense, this is infuriating–the Europeans have no business meddling in the workings of American democracy. Yet it is also devilishly clever. Now that we’re on the other side of the equation, I hope that our trade strategists are giving thought to how they can pursue a similar strategy and arrive at a similar result.
The good news about the showdown over steel tariffs is that Europe didn’t have to act. The Bush administration did the right thing and backed down–and we all sidestepped a trade war that easily might have escalated, to the detriment of everyone.
We should strive for the same kind of outcome with Mexico. The WTO may permit reprisals, but our goal should be reducing protectionist barriers rather than raising new ones. What we want, simply, is for Mexico to repeal an illegal tax that is hurting Americans. (It hurts Mexicans, too, because it raises consumer prices for them.)
We’ve waited long enough for our government to take this dramatic step with the WTO. Now we’ll have to wait just a bit longer–at least six months, and perhaps as many as 18, before we have a ruling. But I’m confident we’ll win, and maybe even by early next year.
No matter what happens–and no matter what W.C. Fields advises–we’ll keep trying to trade freely and fairly with the people of Mexico.