September 21, 2009

Study: U.S.-Mexico trucking dispute hurting economy

U.S. Chamber of Commerce claims cross-border clash has cost U.S. businesses and consumers $2.2 billion to date.

By Mark B. Solomon

The U.S. government's decision earlier this year to end a cross-border trucking program with Mexico, and subsequent economic retaliation by the Mexican government, has already resulted in 25,000 lost American jobs, $2.6 billion in foregone U.S. exports, and $2.2 billion in higher costs for U.S. businesses and consumers, according to a U.S. Chamber of Commerce study released Sept. 15.

In March, Congress and the Obama administration ended funding for a two-year program that allowed 100 Mexican trucking firms to operate in the United States beyond a 25-mile commercial zone along the U.S.-Mexico border. In retaliation, Mexico slapped $2.3 billion in penalty duties on 89 U.S. import products, with an immediate duty cost to American consumers of about $421 million, according to the study.

In addition, the study said the decision to end the program means truckers operating between the United States and Mexico must continue to rely on costly short-haul drayage to pull cargo-laden trailers across the border, where they are picked up by long-haul trucks on the other side for delivery to their destinations. Drayage services cost $739 million in 2008, the study concluded, costs that were eventually passed on to consumers in the form of higher prices for Mexican imports.

The 1994 North American Free Trade Agreement (NAFTA) required an eventual phase-out of access restrictions on Mexican trucks operating in the United States. Under the original schedule, the United States was to have opened its roadways to Mexican truckers on Jan. 1, 2000. However, the United States has blocked implementation of that provision, citing environmental and safety concerns.

According to the study's authors, while the so-called "input costs" of drayage and the Mexican retaliation totaled approximately $1.15 billion, their cumulative impact on U.S. economic activity is more than $1 billion higher.

The study calculated that 0.02 percent of all American jobs, or 25,557 positions, have been lost as a result of the United States' actions and Mexico's retaliation. The calculations were based on total U.S. full-time equivalent employment of 127.8 million in 2008.

Others see it differently. For instance, the Teamsters Union, which has strongly opposed the opening of U.S. highways to Mexican truckers, places responsibility for the job losses elsewhere. NAFTA alone has cost at least 1 million U.S. jobs by giving U.S. businesses incentives to relocate production to lower-cost Mexican locations, said Teamster spokesperson Leigh Strope in an e-mail. Strope also blamed the Mexican government for imposing retaliatory tariffs that were "manifestly excessive" and "a violation of trade rules."

The Teamsters maintain that Mexican truckers continue to pose a safety and environmental threat. "If the Mexican government wants our border opened to its trucks and drivers, then it can live up to its responsibility to make sure those trucks and drivers meet U.S. highway standards," said Strope.

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.

More articles by Mark B. Solomon

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