It took five years, but the dispute between the United States and Mexico over mutual access by motor carriers came to a head in early February when an arbitration panel ruled that the United States was obligated to let Mexican truckers cross the border.

The ruling—and President George W. Bush's unpopular decision to comply with it—has prompted protests from a number of congressmen, labor unions, consumer groups, and industry organizations who believe that allowing Mexican drivers and vehicles to travel on U.S. roads will compromise public safety.

The dispute dates back to Dec. 17, 1995, just one day before the U.S., Mexican, and Canadian borders were scheduled to open to motor carriers handling cross-border shipments from all three countries under the North American Free Trade Agreement (NAFTA). Citing concerns about safety, the Clinton administration announced that it would not process Mexican carriers' applications to enter the United States and that it would not allow cross-border trucking beyond already established commercial zones until it was satisfied with Mexican carriers' level of compliance with U.S. safety laws.

That decision, which many believe was orchestrated by organized labor, set in motion the decision that was announced last month. The five-person panel—consisting of two U.S. nationals and two Mexican nationals and chaired by a British jurist—unanimously agreed that issuing a "blanket" ban on Mexican carriers constituted a breach of the United States' legal obligations to afford equal treatment to all NAFTA signatories. The panel also ruled that differences in the Mexican system of regulating its motor carriers did not constitute grounds for the United States to maintain a moratorium on considering Mexican carriers' applications for U.S. operating authority. Finally, the panel said that the United States had breached its legal obligations by failing to permit Mexican nationals to invest in U.S. companies that carry international cargoes within the United States.

In its findings, the panel made it clear that it was not prohibiting any NAFTA country from setting adequate levels of protection in the context of legitimate regulatory objectives. It also stressed that the member countries were free to exclude any individual motor carrier, driver, or vehicle that was unable to comply with national trucking regulations when operating in their territories. Nevertheless, the panel cautioned, Mexican carriers must be treated in the same way as U.S. and Canadian companies, unless there was a specific, legitimate safety concern that mandated different procedures. The bottom line: "The Panel recommends that the United States take appropriate steps to bring its practices with respect to cross-border trucking services and investment into compliance with its obligations under the applicable provisions of NAFTA."

At press time, the U.S. trade representative was said to be negotiating with Mexican officials about how to implement the border opening. If the United States refuses to comply with the panel's recommendations, then Mexico has the right to receive damages by imposing tariffs on its northern neighbor. Several reports have Mexico asking for $2 billion per year in compensation for lost business, although the actual loss would be difficult, if not impossible, to quantify.

Response was swift to Bush's statement that he would abide by the panel's ruling. International Brotherhood of Teamsters General President James P. Hoffa denounced the decision. "Our nation has surrendered control over access to U.S. highways to an outside panel that includes unelected representatives of foreign governments," he said. "... We remain adamant that the safety of our citizens must come before diplomatic niceties."

The Owner-Operator Independent Drivers Association (OOIDA) called on President Bush to maintain current restrictions on Mexican truckers until a system was in place to assure that they comply with U.S. safety laws. OOIDA President Jim Johnston cited concerns about the condition of Mexican-owned equipment and individual states' inability to enforce compliance with insurance, customs, immigration, and cabotage regulations.

Members of Congress expressed their concerns as well. Rep. Don Young (R-Alaska) and Rep. James Oberstar (D-Minn.), the top-ranking members of the House Transportation and Infrastructure Committee, urged the Bush administration to develop an effective screening system at the border before approving requests by Mexican carriers to operate in the United States. "The Department of Transportation must be able to guarantee that every truck crossing our border meets all applicable U.S. safety standards for both the driver and the truck before it enters this country," Young said.

One week after the NAFTA panel's decision was made public, Rep. William O. Lipinski (D-Ill.) reintroduced a bill that he originally floated in 1999. The Foreign Truck Safety Act would mandate safety inspections for any foreign trucks that had not been inspected at the border within the previous 12 months. It also would allow states to impose fees to fund such inspections.

Similar concerns are being raised in Canada. Robert Evans, executive director of Canadians for Responsible and Safe Highways (CRASH), suggests that the arrival of Mexican trucks in his country at a time when Canada is considering extending its own drivers' hours "stretches the safety envelope on Canadian roads beyond the tolerable."

To date, about 185 Mexican truckload carriers have filed applications with the U.S. DOT to operate in the United States. But many Mexican motor carriers are opposed to opening the border, fearing that better-capitalized U.S. carriers will sweep into Mexico and take away their business, particularly that of multinational customers. CANACAR, the largest trucking association in Mexico, wants at least a five-year delay in implementation. The Mexican government, however, is fully committed to an immediate border opening.

U.S. carriers, on the other hand, may have little to worry about where competition is concerned, says longtime border observer Dr. James R. Giermanski, professor of international business at Belmont Abbey College in Charlotte, N.C., and a Logisticscolumnist. "What nobody seems to be talking about yet is the basic, fundamental business problem a Mexican carrier will have operating in the United States," he says. Giermanski notes that Mexican carriers will have a difficult time finding backhauls from U.S. interior points to Mexico—a necessity since they will only be allowed to handle international cargo and are forbidden to do any domestic hauling. "They won't be able to enter the local labor market and shop for international cargo. There's a high probability that they won't be able to compete well in the beginning."

Giermanski points out that to compete in the United States, Mexican truckers would have to develop equipment pools to avoid equipment imbalances. Their costs would also be higher than they are in Mexico. Not only would they be paying higher prices for diesel, but they also would have to maintain U.S. levels of insurance on their equipment, drivers, and cargo, he observes. If a Mexican tractor travels more than 5,000 miles within the United States, the carrier would have to register that vehicle and pay highway taxes. Depending on how many hours a driver spends in this country, he may have to pay U.S. federal taxes. And just getting customers in the United States is costly, he says.

In sum, Giermanski says, "I don't foresee a real big impact if they opened the border tomorrow." There are too many roadblocks, he believes, for Mexican trucking companies to become significant players in the U.S. market right away.