March 3, 2011

Obama, Calderon announce deal to end U.S.-Mexico truck fight

Agreement would end two-year standoff over access by Mexican truckers to U.S. highways.

By Mark B. Solomon

The United States and Mexico today announced a tentative resolution of a cross-border trucking dispute that has cost U.S. exporters millions of dollars in business and created significant ill will between the two countries.

The agreement, announced in a joint statement by President Barack Obama and Mexican President Felipe Calderon, establishes what the countries call a "reciprocal, phased-in program" to allow U.S. and Mexican carriers to operate on both sides of the border. In return, Mexico, which two years ago began imposing tariffs on 89 U.S. imports in retaliation for its carriers being denied access to U.S. markets, will reduce those tariffs by 50 percent at the time a final agreement is signed and suspend the remaining 50 percent when the first Mexican carrier is granted operating authority under the program, according to the statement. Mexico will terminate all current tariffs once the program is "normalized," the statement said.

U.S. and Mexican negotiators expect to soon complete work on a final agreement, which will then be presented to Congress and put out for public comment in the United States. Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk, both of whom were involved in negotiating the deal, have said they expect a final agreement by mid-year.

The agreement maintains previous conditions for Mexican trucks operating on U.S. highways, among them the requirement that Mexican fleets apply for and receive authority from the Federal Motor Carrier Safety Administration and demonstrate they meet the same safety standards as U.S. fleets. In addition, Mexican trucks will be prohibited from hauling freight between destinations within the United States.

Stopping the "carousel"
In early January, the U.S. Department of Transportation circulated what it termed a "concept document" that would enable Mexican trucks to operate in U.S. commerce beyond a 25-mile border "commercial zone." The proposal came nearly two years after President Obama signed an omnibus spending bill that ended funding for a 2007 pilot program that gave Mexican truckers and drivers limited access to U.S. markets.

Supporters of the president's 2009 action, namely the Teamsters union and independent truck drivers, had hailed it as an important step in keeping unsafe and unqualified Mexican truckers off U.S. highways. Critics said the administration's decision violated a provision in the 1994 North American Free Trade Agreement that required the United States to grant Mexican truckers full access to its highways by January 2000.

The tariffs imposed by the Mexican government affected U.S. imports valued at about $2.4 billion a year. Mexico imposed the tariffs using a rotating "carousel" mechanism that lets it remove some products from the list while adding others.

At a transport industry gathering in early January, LaHood said the tariffs have had a "huge impact"" on U.S. producers and growers, which consider Mexico one of their largest export markets, if not the largest. His comments have echoed those of the U.S. Chamber of Commerce and of congressmen representing key growing states whose companies sell heavily into Mexico.

Following the release of the DOT document, Mexico said it would stop the "carousel" and refrain from adding any more products to the list.

Mixed reaction
The American Trucking Associations (ATA), which represents the nation's largest for-hire carriers, applauded today's move.

"We hope this agreement will be a first step to increasing trade between our two countries, more than 70 percent of which crosses the border by truck," said ATA President Bill P. Graves in a statement.

The Owner-Operator Independent Drivers Association (OOIDA), which represents small, owner-operator truck fleets and which has long opposed efforts to open the U.S. market to Mexican truckers, expressed outrage.

"Simply unbelievable," said Todd Spencer, executive vice president of OOIDA, in an announcement. "For all the president's talk of helping small businesses survive, his administration is sure doing [its] best to destroy small trucking companies and the drivers they employ."

Spencer added: "Small business truckers are in the midst of dealing with an avalanche of regulatory rulemakings from the administration. They are also struggling to survive in a very difficult economy. This announcement is tantamount to rubbing salt in wounds already inflicted."

The Teamsters union, which also opposes the measure, had not issued a comment at press time. At the time of the DOT's original draft document, Teamsters President James P. Hoffa warned that, if approved, the proposal would endanger the U.S. traveling public and expose the U.S. southern border to increased drug trafficking from Mexican cartels.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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