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DeFazio blasts proposed U.S.-Mexico cross-border trucking program

By Jeff Berman, Group News Editor
March 15, 2011

Earlier this month, the United States and Mexico finally reached an agreement to resolve the issues surrounding the countries cross-border trucking program.

U.S. President Barack Obama and Mexico President Felipe Calderon announced that U.S. and Mexico have come to an agreement for how to resolve the long-history of issues the program has witnessed, especially in the last two years. They said that they have come up with a solution that will “allow for the establishment of a reciprocal, phased-in program built on the highest safety standards that will authorize both Mexican and United States long-haul carriers to engage in cross-border operations under NAFTA.”

While this news was widely viewed as welcome and overdue, it was blasted by Representative Peter DeFazio (D-OR), Ranking Member of the House Subcommittee on Highways and Transit.

In a letter to Department of Transportation Secretary Ray LaHood, DeFazio expressed his concern about the plan to allow Mexican trucking companies to operate long-haul in the U.S.

“I am greatly concerned that the Administration is not launching a pilot program, but rather starting the full liberalization of cross-border trucking,” wrote DeFazio. “A true pilot program should grant a discreet number of Mexican carriers the opportunity to operate beyond the commercial zones at the U.S.-Mexico border. The U.S. government would strictly monitor the operations of these carriers, and at the end of the pilot program, suspend any further operations while evaluating the results.”

DeFazio also requested additional details regarding the proposed pilot program, which would allow Mexican trucks to operate on U.S. highways beyond the current border commercial zone and allow Mexican carriers to obtain permanent operating authority from the U.S. Department of Transportation (DOT) after 18 months in the pilot program. After the 18-month period, DeFazio wrote that this authority becomes permanent indefinitely if the carrier does not have an egregious safety record or a lapse in insurance.

DeFazio also expressed his opposition to a proposal in the White House’s Fiscal Year 2012 budget, which calls for the FMCSA to use $4.3 million in operating expenses for the pilot program, which would come out of the Highway Trust Fund.

In 2009, the pilot program for cross-border trucking was eliminated as part of the White House’s $410 billion Omnibus Appropriations Act, H.R. 4105. Even through this program-killing measure was approved, that Obama administration said it would work to create a new cross-border, long distance trucking program between the U.S. and Mexico. Soon after the program was eliminated, the Mexican government said it would place tariffs on roughly 90 American agricultural and manufactured exports as payback for the U.S. decision to shutter the program.

These tariffs amount to $2.4 billion of American goods, ranging from fruit juices to pet food to deodorant, among others, ranging from 10 percent to 45 percent, with affected products coming from 40 states.

According to White House officials, once a final agreement is reached, Mexico will suspend its retaliatory tariffs in stages beginning with reducing tariffs by 50 percent at the signing of an agreement and will suspend the remaining 50 percent when the first Mexican carrier is granted operating authority under the program.  They added that Mexico will terminate all current tariffs once the program is normalized, and said that the agreed schedule will not affect the rights and obligations of Mexico or the United States under the NAFTA, including Mexico’s right to apply its retaliatory measures. 

This development was warmly embraced by various industry concerns.

“We view the agreement that was announced as a positive, because it will allow trucking to fully participate in commerce with Mexico in accordance with the guidelines established in the NFATA treaty,” said Patrick Quinn, co-chairman and president, U.S. Xpress Enterprises Inc. “It’s very encouraging that the announced agreement places a great emphasis on safety, including EOBRs and compliance with the Hours-of-Service. If the participating carriers can meet the standards the U.S. has set for both safety and emissions, then two of the biggest concerns will have been addressed. The approach that they are taking through the reciprocal, phased-in pilot program is a good way to take the first steps. Another positive coming out of the agreement is the elimination of tariffs that Mexico has placed on many goods. The removal of these tariffs can help the economic recovery here in the U.S.”

And American Trucking Associations President and CEO Bill Graves said in a statement that when properly implemented, NAFTA’s trucking provisions should evolve to allow for a more efficient, safe and secure environment for cross-border operations between the U.S. and Mexico.

“Ensuring a level playing field requires that both countries establish permitting and regulatory processes that are clear and transparent to ensure that carriers from both countries are treated equitably,” said Graves.

Operator Independent Drivers Association Executive Vice President Todd Spencer said in a statement that White House’s failure to challenge the Mexican tariffs has jeopardized the livelihoods of millions of truckers and other Americans.

“Mexico’s economic bullying tactics should not be tolerated,” he said. “The onus is on Mexico to raise the safety, security and environmental standards for their trucking industry,” added Spencer. “We should not allow ourselves to be harassed into lowering our standards.”

For related articles, please click here.

 

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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