On July 6, the United States and Mexico signed an agreement that will finally open the doors for Mexican trucks to begin hauling cargo into the United States. In return, Mexico will lift over $2 billion in tariffs it had slapped on certain import products in retaliation for the United States' failure to honor commitments made under the North American Free Trade Agreement (NAFTA).
Signed into law in 1993, NAFTA was supposed to eliminate barriers to trade among the United States, Canada, and Mexico. As part of the deal, the United States agreed to give both Canadian and Mexican truckers full and free access to U.S. highways by Jan. 1, 2000. While Canadian truckers immediately got the green light to move freely about this country, that wasn't the case for their Mexican counterparts. For the next 18 years, Mexican truckers remained stuck in idle, barred from traveling beyond U.S. commercial zones that extend roughly 25 miles along the border.
The first signs of trouble appeared back in 1995, when the Clinton administration put the trucking provisions of NAFTA on hold—but only for the Mexican truckers—citing concerns about their ability to meet U.S. safety standards. With the issue still unresolved three years later, Mexico took the matter to a NAFTA dispute settlement panel, which ruled in 2001 that the United States was in violation of the agreement. But that wasn't enough to clear the way for the program. Various legislative and legal challenges kept the initiative tied up in court until 2004, when the U.S. Supreme Court resolved the matter (we thought), ruling that Mexican truckers should be allowed into the United States.
It took three years, but in February 2007, the Department of Transportation (DOT) announced a one-year pilot program that would allow selected Mexican carriers to make deliveries beyond the border commercial zones. To participate, truckers had to pass a safety audit by U.S. inspectors, including a review of driver records, insurance policies, drug and alcohol testing programs, and vehicle inspection records.
The plan immediately came under fire from some legislators, the Owner-Operator Independent Drivers Association, and the Teamsters. As opposition mounted, Congress in 2009 cut off the funding for the pilot, and Mexico finally pushed back by levying $2.4 billion in tariffs, as high as 45 percent on some commodities.
The new agreement will bring some relief for importers. Under the new accord, Mexico agreed to a phased-in elimination of the tariffs. The United States, in turn, will reinstate the pilot program. The pact requires Mexican trucks to obtain authority from the Federal Motor Carrier Safety Administration (FMCSA) and demonstrate they meet the same safety standards as U.S. fleets.
Although the agreement was hailed by organizations such as the U.S. Chamber of Commerce, the American Trucking Associations, and a number of farm groups, it has been bitterly denounced in other quarters. The Teamsters claim it will result in lost jobs, as well as create safety and security issues. The owner-operators have characterized it as a threat to small trucking companies. Several members of Congress have already introduced legislation that would limit the administration's authority to implement the program. Not surprisingly, much of the opposition centers on a controversial move by the DOT to use money from the nation's highway trust fund to pay for electronic onboard recorders to monitor the movements of Mexican trucks.
Although the plan will never be universally popular, it's time to move forward. The benefits of NAFTA cannot be denied. In 2010, imports and exports between the United States and Canada totaled $528 billion, and U.S.-Mexico trade totaled $393 billion. Well over $2 billion in trade moves among the three countries every day. The DOT has taken the steps necessary to ensure that Mexican truckers who wish to cross the border meet U.S. safety requirements. Let's keep our commitment and move on.
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