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U.S., Mexico focus on cross-border trucking compromise

By Jeff Berman, Group News Editor
March 04, 2011

In a political battle that has seen more than its fair share of tension, the United States and Mexico have finally hammered out an agreement to resolve the issues surrounding the countries cross-border trucking program.

U.S. President Barack Obama and Mexico President Felipe Calderon announced yesterday 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.”

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 agreement will deliver a program that is safe, secure, efficient, and advances the economic interests of both the United States and Mexico,” said the White House. “It also will feature a number of program improvements that are important to both United States and Mexican interests.  U.S. and Mexican negotiators are continuing to work through the remaining issues and expect to have a draft final agreement in place very soon.  As soon as all of the details are in place, the United States Department of Transportation and USTR will confer with interested members of Congress and publicly share the proposed agreement and seek comment.”

In January, Department of Transportation Secretary Ray LaHood shared “an initial concept document” with members of Congress for a long-haul cross-border Mexican trucking program. This document prioritizes safety while satisfying the United States’ international obligations.

“This [program] is the law, and it is part of NAFTA,” said LaHood at an industry conference earlier this year. “We have to do it, and when it was suspended by Congress, I met with more than 30 members of Congress to tell them we need to get this going again. Every member talked about safety, as did trucking groups and unions. Our proposal addresses a lot of the safety issues, and now a team of DOT safety officials are meeting with Mexican officials to flesh out a final proposal, because we have to under NAFTA.”

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.


The National Association of Manufacturers praised this news, explaining that it can help augment U.S export levels, as U.S.-manufactured goods to Mexico have been impacted heavily by Mexico’s retaliatory tariffs, coupled with U.S. manufacturers losing market share to other countries along with billions of dollars of U.S. exports to Mexico and tens of thousands of manufacturing jobs have been negatively impacted.

Meanwhile and not surprisingly, the Owner-Operator Independent Drivers Association blasted this development, saying it is detrimental to small trucking companies and their drivers.

OOIDA 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 on Cross Border Trucking, 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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