Moving back to the front burner ...

By Timothy Brady

In March of 2009, President Obama signed legislation that canceled U.S. participation in the Cross-border Demonstration program with Mexico in what Mexican authorities claim is a violation of the North American Free Trade Agreement (NAFTA). There were only 27 companies in the Mexican program with 104 units, and 10 U.S. companies with 52 vehicles, a figure well below the expectation of 100 firms per country.

That same month, Mexico retaliated toward the U.S. for canceling the pilot program by placing tariffs totaling about $2.4 billion a year on 89 products. A little over a year later, in August, 2010, the Mexican government imposed a second round of penalizing tariffs on U.S. exports to protest the closing of the common national boundary to cross-border trucking, saying the United States had yet to propose a plan to allow trucks from Mexico to deliver in the United States. Pork, cheese, pistachio nuts, ketchup and citrus fruits are among the products newly subject to levies as high as 25%.

Since March of 2009, Mexican carriers have been prohibited by the U.S. DOT from hauling freight to and from the United States and Canada. However, the original 10 U.S. carriers involved in the Cross-Border Pilot program have continued to haul freight into and out of Mexico without interruption. The Mexican Government has just extended the program for the 10 U.S. carriers to February 2011.

CANACAR, the Mexican trucking organization which represents many of the country’s trucking companies issued a news release on August 29, 2010 protesting the extension for 10 U.S. carriers to continue operating in Mexico through February of 2011. In a translation of CANCAR’s statement: “The SCT (Secretaría de Comunicaciones y Transportes) [Mexican DOT/FMCSA] wants to allow US trucks to operate in Mexico until February 2011. CANACAR objects to the expansion because the program is a total failure. They further object to allowing US trucks continued access while Mexican trucks are forbidden access to the US.”

“It is incongruous that the SCT intends to keep the demonstration program the U.S. government closed on March 18, 2009, and [yet] insisting unilaterally that U.S. carriers can enter our territory when Mexican motor carriers are, at present, prevented from entering the U.S.,” said Jose Refugio Munoz, president of CANACAR. 

CANACAR has also requested the Federal Government of Mexico file suit against the U.S. for losses to the Mexican transportation industry over the past 15 years for non-compliance with the provisions of NAFTA, unless the border is opened both ways to trucks from both countries.

As of September 13, 2010, CANACAR has filed a notice of intent to seek through arbitration more than $2 billion a year from the U.S. government that it said its members have lost because the United States doesn’t permit Mexican trucks to enter the United States

López Muñoz urged  SCT and the Ministry of Economy to adopt measures that protect Mexican cargo carriers, which are a key sector in the country's economic development. Munoz of CANCAR  is calling on the Ministry of Economy to put in place protections to prevent U.S. carriers from undercutting Mexican rates. 

“Accordingly,” López Muñoz said, “CANACAR cannot endorse the actions taken by the Ministry of Economy as it relates to the determination of charging a tariff on imported goods from the U.S.”.

The Teamsters union, OOIDA and other opponents of cross-border trucking have said repeatedly they question the safety of Mexican trucks.

In response to the safety assertion, representatives of the Mexican government have stressed over and over that the Teamsters and OOIDA are really more concerned about protectionism and know full well Mexican carriers and drivers are as safe or safer than their U.S. counterparts.

A spokesperson from the Mexican Embassy said, “The decision to end the program was never about the safety of America’s roads It was driven by protectionism, the costs of which are borne by businesses, workers and consumers in our two nations.”

As the heat from Mexico intensifies through increased tariffs on U.S.-produced goods as retaliation for the U.S. failing to honor the NAFTA agreement, and pressure from special interest groups who are trying to stop the entire process grows, we can expect the issue to reach the boiling point very soon.

Mexico is one of our top trading partners, so no matter what the conclusion is on the entire cross-border trucking issue it will have a profound effect on the US economy and the North American economy as a whole. Whether it is a positive or negative one will depend on all parties involved and how willing they are to come to a fair and equitable solution. But keeping the battle going and not resolving the issue will be harder on all countries, consumers and businesses currently impacted by this issue than no resolution at all.

Good loads and good roads, everyone.

Timothy Brady  ©2010

www.timothybrady.com