US And Mexico In Protectionism Row

President Barack Obama's administration is facing it's first trade dispute as a row over protectionism erupts with neighbouring Mexico.

The dispute centres around US Congress last week cancelling a funding program that allows Mexican trucks full access to all the major American highways in an effort to protect US jobs.

After years of disputes between Mexican and US truckers, the Bush administration finally began to allow Mexican lorries free access to US highways in 2007.

Last week's move has effectively put a stop to that, in breach of the North American Free Trade Agreement (NAFTA), say the Mexicans.

The NAFTA was signed by the US, Mexico and Canada in 1992, initially allowing Mexican trucks access to border areas only where their cargo had to be discharged and redistributed using US transport.

That all changed under George W Bush, despite fierce opposition from US truckers unions and environmentalists. It seems that all bets are now off under the Obama administration. He'd like to re-write the agreement, a move that Mexico are likely to strongly resist, especially in the current economic climate.

In retaliation at last week's move Mexico has said that it will slap import tariffs on US agricultural & industrial goods, without quantifying exactly which goods it is referring to.

It is thought unlikely that they mean staple Mexican foods such as corn or wheat however.