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Protectionism Blows up in Zack Space and Sherrod Brown’s Faces

December 17th, 2009 Matt Comments off

KABOOM!:

WASHINGTON — A Chillicothe paper mill is losing millions of dollars in sales after becoming the unintended victim of an international trade fight sparked by the shutdown of a pilot program letting Mexican trucks operate in the United States.

Enough is enough, says Rep. Zack Space, D-Dover, who wrote to Obama administration officials yesterday pleading for “swift action to end Mexico’s imposition of retaliatory tariffs on American products.”

Congress voted to halt the truck program last spring, and Sen. Sherrod Brown, D-Ohio, was one of the leading congressional critics raising safety questions about the Mexican trucks.

Space was among the large, bipartisan group of lawmakers who favored ending the program. But now, Space, whose district includes Chillicothe, wants the Obama administration to do something about the resulting trade-war fallout. Mexican officials said the trucking initiative was approved under the 1993 North American Free Trade Agreement and should have meant full access to the U.S. market years ago, not just a pilot program.

In retaliation for the shutdown of the pilot program, Mexico in March slapped a 10 percent tariff on U.S. imports of carbonless paper, part of $2.4 billion in higher tariffs on U.S. products entering Mexico.

The Chillicothe plant on S. Paint Street, owned by Pennsylvania-based Glatfelter, generates $338 million in annual sales of carbonless paper, about $12 million of that to Mexican customers.

Since the tariff went into effect, Glatfelter’s carbonless paper sales in Mexico have dropped by half, said William Yanavitch, a Glatfelter vice president.

It is fun watching politicians suck up to their union masters. NAFTA, which has been a widely abused program by protectionist politicians like Sherrod Brown and Zack Space- Roughly 55% of Ohio’s exports go to our trading partners in NAFTA: Canada and Mexico. That is higher than the national average of about 35%. And Ohio’s real problem are caused by those screaming the loudest about free-trade, as Ohio is a high-taxed, heavily unionized state without a right-to-work law.

Once politicians start pushing for trade wars on behalf of special interests (while making the costs of the goods you buy more expensive), countries have no other option but to retaliate. I couldn’t be more pleased to see Brown and Space get a taste of their own mercantilist medicine, but it a shame that a profitable, job-creating Chillicothe paper mill has to suffer in the mean time.

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