Obama\u27s First Trade War: The US-Mexico Cross-Border Trucking Dispute and the Implications of Strategic Cross-Sector Retaliation on U.S. Compliance Under NAFTA

Mexico\u27s recent decision to employ strategic cross-sector retaliation against the US in response to the US suspension of the 2007 Cross-Border Trucking Development pilot program is a significant development in NAFTA relations. Never before has a NAFTA member imposed sanctions in this way to pressure a fellow member to comply with its NAFTA obligations. To date, this remedy has been utilized only in two WTO cases. In both these asymmetric disputes, the larger stat either withdrew the offending trade measure or modified its commitments to avoid the political fallout of targeted sanctions back home in unrelated industry sectors. The WTO\u27s record of success at this final stage of dispute resolute underpins the Mexican government\u27s decision to utilize this remedy under NAFTA. Mexico\u27s hope is that targeted import duties on selected goods in key Democratic states will result in sufficient pressure on Congress and the White House to restart the trucking program without igniting a trade war. This is a risky move, but all signs indicate that the US government is moving closer to bringing its cross-border trucking policy in line with NAFTA