Peter Passell
Editor, The Milken Institute Review; Senior Fellow
California and Capital Markets and Europe and Finance and Global Economy and Labor and Public Policy and U.S. Economy
Peter Passell is editor of The Milken Institute Review, the Institute's economic quarterly. A senior fellow, Passell joined the Institute after eight years as economics columnist for the news department of The New York Times. He previously served on the Times' editorial board and was an assistant professor at Columbia...
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The president's take-a-businessman-to-lunch initiative
By: Peter Passell
March 04, 2011
Is President Obama's charm offensive with business for real? To my reckoning, it doesn't much matter whether, in his heart of hearts, Mr. Obama feels Joe the Plumber's pain. What counts is action. And few presidential initiatives could be more pro-business or more welcome than the administration's apparent resolution of a 15-year-old dispute with Mexico over cross-border trucking that has cost America billions in export revenue.

The dispute goes back to NAFTA (which was negotiated by a centrist Democrat). Does the free trade treaty give Mexican trucking companies the right to compete for shipping business in the United States? The Teamsters union, which had already been bludgeoned by domestic trucking deregulation in the 1980s (also pushed through Congress by a centrist Democrat), was aghast. And in opposing the competition, it cleverly played on fears of broken-down Mexican trucks piloted by drug-addled campesinos hurtling down the interstates. That pitch won the hearts, if not the minds, of a majority in Congress, which fought successfully to keep the trucks out. Mexico eventually retaliated, as was its right under NAFTA, with punitive tariffs on U.S. exports. These tariffs were largely aimed at agricultural products, where American farmers enjoy huge productivity advantages over the Mexican competition.

But President Obama seems to have broken the impasse. Under the deal just inked, the tariffs will be removed in stages as Mexican trucking firms that meet U.S. Department of Transportation safety standards are given the green light.

Note that, in making a deal, the president broke with unions that generally support Democrats and made common cause with farmers who wouldn't think of giving him the time of day. There may be a cynical calculation behind this move toward the center. But whether it was motivated by a wish to do the right thing or by the imperatives of political triangulation, it was good policy. More of same, please.