Figures recently released by a cargo security firm show that Mexico has become a popular spot for pharmaceutical cargo theft.

In the second quarter of 2010 there were six pharmaceutical cargo thefts in Mexico, compared to three in the first three months of the year, according to logistics security firm FreightWatch. While the number of pharmaceutical cargo thefts makes up a small percentage of overall cargo heists, the numbers indicate an upward trend, reports SecuringPharma.com.

FreightWatch CEO Barry Conlon said that thieves are now targeting pharmaceutical cargo shipments, which is a relatively new practice.

“Pharmaceutical theft four or five years ago wasn’t even on the radar,” he said. “And when it did occur, it was probably a mistake and it would turn up a day later. Now it’s actively being targeted.

The security firm said that pharmaceutical shipments are targeted because they are worth a lot.

“Drug gangs continue to target high-value truckloads to compensate for drug income losses occasioned by law enforcement efforts of Mexican government,” the company said.

In March of 2009, lawmakers canceled funding for a test program pioneered by the Bush administration that allowed Mexican long-haul trucks into the United states, because of safety and security concerns.

But Mexico retaliated by slapping taxes on a long list of U.S. exports, including fruits and industrial goods, worth an estimated $2.4 billion dollars.

“I can tell you that those industries in the united states, our farmers, our ranchers, our other exporters that have been subject of the retaliation, have made their displeasure known to congress and so there is a sense of urgency within the united states,” said U.S. Trade Representative Ron Kirk.

Kirk is packing his bags for Mexico this week to move forward with the discussion. He says that President Obama is pushing for congress to remove the clause, which cuts funding for the program and it’s giving congress the green light to move forward..

“We have been able to work with congress and Obama is very pleased that the language in the 2009 appropriations bill that essentially cut off the funding for the demonstration safety program was not included in the 2010 appropriations bill,” said Kirk

In a Jan. 29 letter to members of Congress, Rep. Dennis Cardoza, D-Calif., and Rep. Rick Larsen, D-Wash., asked colleagues to sign a letter encouraging Department of Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk to find a solution to Mexican agricultural tariffs.

Congress terminated funding in the fiscal year 2009 omnibus appropriations bill for a pilot program that would allow trucks from Mexico into the U.S. to deliver loads directly to buyers.

File Photo

A Mexican truck unloads produce in Houston in 2006.

Cardoza and Larsen said the truck ban directly led to Mexico imposing retaliatory tariffs last March, resulting in economic setbacks for hundreds of growers and businesses.

The lawmakers wrote that Congress removed the prohibition in the fiscal year 2010 consolidated appropriations bill.

“Despite repeated letters and communication with the administration, the department of transportation has not moved forward to develop a plan that would remove these burdensome tariffs from the backs of our domestic businesses and farmers,” the letter said to their colleagues said.

In the letter to LaHood and Kirk, the lawmakers expressed concern about the lack of action and transparency by the Department of Transportation to address the tariffs imposed by Mexico.

“These tariffs have had a devastating impact on our local industries and area economies and we urge you to take immediate action to implement a plan of action to rectify this situation,” the letter said.

Calls to the public affairs office of the Department of Transportation were not returned.

Mexico has imposed retaliatory duties on more than 90 products, with ranging between 10% and 45%. Fresh produce items hit by the retaliatory tariff include lettuce, strawberries, pears, apricots, dates and onions. Frozen potatoes were also hit by a 20% tariff.

Without 20% retaliatory tariffs on cherries last season, Mark Powers, vice president of the Northwest Horticultural Council, Yakima, Wash., said industry experts believe that Northwest cherry exporters could have exported 50% more volume to Mexico.

Likewise, the cumulative negative effect on fresh pear growers is close to $11 million, Power said.

“That’s coming straight out of the growers’ pockets,” he said.

The letter to the administration officials said that despite expressions of confidence from the Obama administration for 11 months, a solution would be found that would fulfill U.S. obligations to Mexico under the North American Free Trade Agreement the letter said there is still vision for what the proposed plan will be.

“Our constituents need help immediately and we implore you to work quickly to implement a program that ensures safety and normalizes trade between the U.S. and Mexico,” the letter said.

Powers said a recent USDA listening session about rural economic development in Washington State had growers point out to Administration officials that solving the tariff problem would create instant opportunity and sales for growers.

Meanwhile, he said that U.S. also must show it adheres to its trade obligations to have credibility with other trading partners.

Ag industry decries tariffs

The Alliance to Keep U.S. Jobs, a coalition of agriculture and industry leaders seeking an end to the retaliatory tariffs, said more than $1.5 billion in U.S. manufactured products and $900 million in U.S. agriculture are hurt by the added costs of exporting to Mexico.

“It’s crazy when you have the administration saying on one hand it is all about jobs, jobs, jobs and you don’t fix this problem,” said John Keeling, executive vice president and chief executive officer of the Washington, D.C.-based National Potato Council. Keeling said U.S. frozen potato exports to Mexico are off 50% in value and 60% in volume over the past year, while Canadian exports to Mexico are up 70%.

“The ball has been in the administration’s court to move this forward,” said Kam Quarles, vice president of government relations and legislative affairs for the United Fresh Produce Association, Washington, D.C. Union support for elimination of the pilot program appears to be contributing to the delay in solving the problem, he said. Quarles said simply restoring the program that had been in place could likely solve the problem in short order.

That pilot program allowed limited access for Mexican trucks on U.S. highways. It began in 2007, six years after a North American Free Trade Agreement dispute settlement panel ruled that the U.S. was in violation of the NAFTA by prohibiting Mexican trucks in the U.S.

“It wasn’t everything the Mexicans wanted under NAFTA, but it was accepted,” Quarles said.

Given the letter from Cardoza and Larsen, Quarles said there is frustration on Capitol Hill about the how much time it is taking to restore the pilot program and remove the retaliatory tariffs

A monthly poll by the central bank showed economists on average expect the economy will grow 3.3 percent this year, higher than a forecast of 3.1 percent in the previous poll.

Despite the higher forecast for growth, economists cut their inflation outlook to 4.93 percent from 5.04 percent, according to the poll which was released on Tuesday.

Mexico’s central bank is expected to raise rates this year to head off inflation even though Central Bank Gov. Agustin Carstens has said he is not that worried about inflation.

Tuesday’s poll will probably make Carstens even less worried, as his chief concern has been that higher taxes and fuel prices push up inflation expectations.

Speaking in Madrid before the release of the poll, Carstens said inflation pressures are well anchored in Mexico despite recent tax and fuel price rises and there is as yet no pressure to raise interest rates.

NAFTA was conceived by President Bush 41, ardently supported by President Clinton (at some considerable political cost to himself), and later promoted as a good model for economic development under the administration of President George W. Bush. The discussion at the Carnegie Endowment seems to be an ideologically driven departure from something that has delivered good results and should be continued.
The real problem, of course, has been the steady refusal of the deeply entrenched public-sector labor unions and politicians on the left in Mexico and the corporatist enablers who head Mexico’s many monopolistic and oligopolistic companies to make the badly needed economic and governance reforms that would open key sectors such as energy to competition and private foreign and domestic investment. NAFTA has been a success for both the U.S. and Mexico, to the extent that it has been permitted to succeed in both countries. Unfortunately, since President Obama came into office he and the U.S. Congress have taken some steps that conflict with either the letter or the spirit of NAFTA (e.g. the cases of “Mexican Trucks” and “Buy America”).

President Felipe Calderon has been trying to get some reforms through the Mexican Congress, but has been largely stymied. The answer is not “to overhaul NAFTA” but to finish the overhaul of the economy and to observe NAFTA rules in the U.S.

Trade among the North American Free Trade Agreement partners fell 2.9% year-to-year, to $58.9 billion. That compared with October’s 15.5% year-to-year decline, DOT said.

Truck imports to the United States rose 2.6% to $20.2 billion from a year earlier, while exports dipped 0.5% to $21.2 billion.

Rail imports fell 9.4% to $6.1 billion, while exports fell 11.9% to $3.5 billion. Pipeline imports plunged 18.5% to $4.2 billion, while exports declined 18.3% to $281 million.

U.S.-Canada trade fell 7.2% to $35 billion, while the value of truck imports to the U.S. fell 6.1% and the value of truck exports slipped 1.8%.

U.S.-Mexico trade fell 4.4% to $23.9 billion. The value of truck imports rose 11.5% and the value of truck exports rose 1.7%.

Surface transportation consists largely of freight movements by truck, rail and pipeline. About 90% of U.S. trade among NAFTA partners moves by land

Despites tons of grass roots and some DC lobbying only a few members of the U.S. Congress have spoken out calling for the negotiating text for ACTA to be made public. Make that, three members of the U.S. Congress, out of 535. Really, how difficult is it to call for transparency of an IPR negotiation? Apparently too hard for 532 members of Congress. Position Senate House

Make ACTA text public
Sherrod Brown (D-OH)
Bernie Sanders (I-VT)
Representative Zoe Lofgren (California, 16th)