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U.S.-Mexico NAFTA Transportation Deal In Trouble

U.S.-Mexico NAFTA Transportation Agreement Imperiled

The governing idea behind NAFTA is to remove trade restrictions so as to encourage the free-flow of goods and services across the North American continent. Along the U.S. - Mexican border, however, the reality is that the ground transportation of such goods remains highly congested and drawn out.

Long-haul trucks from Mexico are restricted from operating in the U.S. except within designated commercial zones located in border-cities such as San Diego, El Paso and Brownsville. At these sites, the contents of a truck must be unloaded and transferred onto a domestic carrier in order to continue to their final destination.

Authorities estimate that this obvious kink in the supply chain costs U.S. consumers $400 million a year.

In September 2007, the Department of Transportation (DOT) began a year-long pilot program to address this theoretically preventable inefficiency. It allowed certified Mexican freight companies to operate certain vehicles on U.S. highways under the same terms and restrictions as U.S. trucks.

The implementation of the experimental program came about as a belated response to a 2001 ruling by a NAFTA dispute resolution panel, which stated that a blanket ban on Mexican trucks coming into the U.S. caused Washington to be in violation of its treaty obligations to not impede trade.

Despite that ruling, the ban has remained in effect since then due to protracted litigation and political roadblocks. Driving the opposition are the Teamsters and the Owner Operator Independent Drivers Association, which fear losing more blue-collar domestic jobs to foreign workers.

Such parties make the case that Mexican truckers pose a threat to U.S. motorists, claiming that they are not subject to the same safety, licensing, and insurance standards as domestic carriers.

This argument appears unfounded. In fact, every Mexican truck involved in the program must meet the rigorous safety and insurance requirements established by Congress in order to be allowed equal access to U.S. roads.

Although the drafting of these regulations may originally have been an attempt by lawmakers to delay the implementation of the pilot program, such measures seem to have worked to ensure adequate safety standards thus far: transportation authorities estimate that, as of June 2008, 18,000 Mexican trucks have traveled on U.S. roads as part of the program, without serious incident. Secretary of Transportation Mary Peters has gone so far as to claim that the safety records of Mexican trucks in fact are better than their American counterparts.

Perhaps dissenters on the issue would be wiser to ally themselves with Congressman Duncan Hunter (R-CA), who argues that opening the border to Mexican long-hauls makes it easier to smuggle drugs and humans into the U.S. This position, however, seems more of a red-herring designed to hamper free trade, than a legitimate concern.

The trucks involved in the program all originate from reputable Mexican freight companies, are subject to heightened scrutiny by border officials, and are monitored by GPS devices for the duration of their trip.

In the meantime, Hunter and his allies will have to wait for evidence, if any, to corroborate their claim, because statistics regarding increased drug and human trafficking as a result of the pilot program will not be available until long after it expires.

The pilot program is scheduled to end in early September, yet its opponents do not seem contented by its approaching expiry. Some members in Congress are taking measures to ensure that such a program will never again return. On July 11, the Senate Appropriations Committee voted 20-9 for an amendment that would cut the funding necessary to extend the current program, or implement a similar one in the future.

If approved by Congress, the Dorgan amendment, named after Senator Byron Dorgan (D-N.D.), would take effect in October of this year. Such an amendment would, as a practical matter, end congressional and executive attempts to encourage free truck passage into the U.S., as was dictated by the NAFTA dispute resolution panel ruling.

If Congress fails to come to any sort of binding consensus on the issue, the decision regarding the future of cross-border trucking may end up being made by the executive branch.

President Bush has supported opening the borders to 18-wheelers throughout the debate, and his administration may move to promulgate legislation to that end before its tenure runs out. Senator McCain also has spoken in favor of open borders.

Meanwhile, Senator Obama has opposed the pilot program. Until the border is opened to truckers from both sides, the U.S. essentially will remain in limbo regarding its obligations under NAFTA.

Proponents of free trade like to remind domestic truckers that they too stand to benefit from cross border trucking, as they would be allowed to operate within Mexico on the basis of reciprocity.

In fact, more than twice as many U.S. truckers have exercised their extended privileges during the pilot program in comparison to their Mexican counterparts.

***

This analysis was prepared by COHA Research Associate Chris Sweeney

July 25th, 2008

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers." For more information, please see our web page at www.coha.org

ENDS

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