4

The LA Times and other reputable sources are reporting that the Trump administration, via a statement by the Press Secretary Mr. Sean Spicer, is planning on introducing a 20% import tax on products crossing the Mexican border.

According to "What the WTO can do" (PDF) summary, it can "settle disputes and reduce trade tensions". Hence, supposing the NAFTA is abolished (since as a free trade agreement it prevents such an import tax), could Mexico file a dispute with the WTO? And if so, would it file that dispute under some kind of "loss of future profits", or would it be for another reason(s)?

  • 1
    I think you mean the Trump administration (i.e. the federal government of the United States, as headed by President Trump,) not the Trump Organization (which is Trump's private business,) right? I'm pretty sure the Trump Organization can't impose taxes of any sort. – reirab Jan 26 '17 at 23:57
  • 1
    What usually happens in cases like this is that the country being targeted by tariff retaliates by imposing tariffs on the imports from that country. While there is currently a trade deficit with Mexico, there are still hundreds of billions of US exports to Mexico that could be taxed. – jalynn2 Jan 29 '17 at 2:01
5

Mexico could always file a complaint, justified or not.

But what would that do for Mexico? Even if Mexico could win the complaint, it cannot enforce that judgment against any sovereign, especially the US, as so much of Mexico's export depends on the US.

In this game, the customer always wields the leverage. Unfortunately so for Mexico.

Edit: Mexico isn't picked randomly, and the game plan is all laid out in Ross confirmation hearing.

Mexico is picked to show other countries, especially China, however damaging of a weapon a trade war with the US can be. Mexico is picked for the maximum visual, with its heavy dependence on the US for trade and cash repatriation, for its weak economy and currency, for its limited currency reserves, ... Mexico is the mostly likely country to capitulate in a trade way with the US.

After that, Trump gets to maximize its negotiation leverage against China, Japan, slides, Germany, ...

Edit 2: this is a trade war that Mexico cannot win. However, Mexico doesn't have to fight the war on Trump's terms. One argument I haven't heard the Mexican government using is humanitarian crisis. If the Mexico economy collapses due to the trade war, Mexico can flood the border with its people, creating a humanitarian crisis and pin that on Trump. Selective TV footage here can be the greatest weapon for Mexico.

| improve this answer | |
  • Doesn't the WTO issue and enforces fines? – ChrisR Jan 26 '17 at 23:17
  • So what? Where can Mexico go to collect that fine? Worst comes to worst, Trump cannot just quit the WTO all together. Fundamentally, this is a game where only a "bully", as someone with thee biggest market, can win. That's why Mexico had to suck up so much pride , up until this point. – dannyf Jan 26 '17 at 23:22
  • interesting addition concerning the refugee crisis. Although one should not expect the Trump administration (and specifically Trump himself) to make any decision on empathy. Historically, US administrations have not demonstrated this (e.g. the recent Syrian crisis, or the rejection of boats of Jewish refugees during WW2). – ChrisR Jan 26 '17 at 23:55
  • 1
    @notstoreboughtdirt, by a "well established informal immigration" do you mean that it's a government or local policy? – ChrisR Jan 27 '17 at 0:06
  • 3
    One argument I haven't heard the Mexican government using is humanitarian crisis. Because that is an absurd idea. While hurting Mexican economy could certainly increase attempts of emigration towards the USA, that would not amount to "humanitarian crisis". Humanitarian crisis is what happens when a massive amount of people is forced to leave their home or suffer extreme hardship (war/conflict, famine, prosecution), to the point that they prefer to live in a refugee camp. People may leave their home in Mexico in the hope of getting to the USA, but not for living in a refugee camp. – SJuan76 Jan 27 '17 at 9:13
4

There is a common question in the US "Can I sue or be sued for [fill in the blank]". The answer is always "Yes". One can sue, in US courts, with the WTO, or anyplace else for any reason. Having the case actually heard rather than tossed out as lacking merit or jurisdiction is an actual hurdle however. The next hurdle would be winning, and finally having any authority to have such a win enforced.

If such a tax were enacted, could Mexico sue, sure. It could be in US courts, with the WTO, or even elsewhere. It might even be heard, and they might even win. Would it do any good however? If it was in US courts, possibly, but anywhere else unlikely as the US, as a sovereign country, would be quite unlikely to cede federal authority to the WTO or any such organization to attempt to dictate national policy or law.

| improve this answer | |
  • 5
    What you say about jurisdiction and enforceability is true enough, but the United States has ratified various international treaties in order to be a member of the WTO. This has, in fact, ceded authority on some matters defined in those treaties to the WTO in exchange for other countries doing the same. Pursuant to Article II, Section 2, paragraph 2 of the U.S. Constitution, treaties ratified by two thirds of the Senate are legally binding in the U.S. – reirab Jan 27 '17 at 0:12

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .