FAST FACTSU.S. tariff reductions from Mexican pact* Manufactured goods* Pork* Fruits* VegetablesCost to U.S. of blocking Mexican trucks* Tariffs - $2.4 billion* Damages sought - $6 billionCost of allowing Mexican trucks* Estimates at $500 million in regulatory enforcement costs* Possible lost jobsSource: The Associated Press
U.S. Transportation Secretary Ray LaHood signed an agreement Wednesday to resolve a decades-long dispute with Mexican authorities over cross-border truck routes.
Since 1994, the spat has resulted in Mexican tariffs on a long list of U.S.-manufactured products ranging from Christmas trees to sunglasses, and a second round of tariffs that hit producers of pork, cheese and even mineral water.
Wednesday's agreement allows Mexico-based trucks across the border, though they will be required to comply with all Federal Motor Vehicle Safety Standards, and must have electronic monitoring systems to ensure that truckers from Mexico don't work more hours than their U.S.-based competitors.
The U.S. Department of Transportation also will review drivers' records, require drug testing sample analysis and require Mexican truck drivers to "undergo an assessment of their ability to understand the English language and U.S. traffic signs," according to the agency.
Canadian trucks are already allowed full access to U.S. roadways.
"This agreement finally puts the U.S. in compliance with the NAFTA treaty," said Greg Thompson a spokesman for Chattanooga-based U.S. Xpress. "The biggest thing was safety, and it looks like they addressed that."
The agreement marks an end to the international controversy surrounding cross-border trucking, but opponents promise that it's just the beginning of a new national debate on an issue that has remained unresolved for more than a decade.
Escalating border wars
The controversy initially escalated when the Obama administration reneged in 2009 on a pilot agreement enacted under the Bush administration with Mexico that allowed Mexican truckers to cross into the U.S.
Mexico, America's third-largest trading partner, retaliated with tariffs of more than $2.4 billion on U.S. manufactured goods and agricultural products, and Mexican trade associations sought more than $6 billion in damages from the U.S. government.
Mexico's retaliation was legal under the 1994 North American Free Trade Agreement, which called for the creation of a cross-border trucking program by the year 2000. But opposition to the agreement from the Teamsters union, the Owner-Operator Independent Drivers Association and their legislative allies elevated the disagreement to an international incident.
Jim Hoffa, international president of the Teamsters union, blasted the agreement as "probably illegal" because it goes further than a previously agreed-on pilot program, and he described it as "opening the border to dangerous trucks at a time of high unemployment and rampant drug violence."
He, along with other agreement opponents, has claimed that Mexican trucks suffer from lax safety and environmental standards, and the lower cost of regulatory compliance for Mexican truckers will result in lost jobs for American drivers.
But Thompson cautioned against jumping to conclusions.
"In terms of having an impact on overall market, we need to see how many Mexican-based carriers choose to participate in the pilot program, and if any of them are looking to establish a footprint in U.S.," said the U.S. Xpress spokesman. "The way this thing works, they can go to a point, but then they have to turn around and come back."
Tariffs or trucks
Jim Johnston, president of the 151,000-member independent drivers association, accused LaHood of "sneaking down there to sign" what he called "Mexico's shakedown."
Johnston said that while Mexican trucks now can travel to the U.S. under the agreement, there would be no reciprocity for U.S. truckers, who must compete under much stricter environmental and safety regulations - regulations that make hauling freight more expensive here than in Mexico.
The U.S. Department of Transportation contends that the new agreement "ensures" that Mexico will provide "reciprocal authority" for U.S. carriers to engage in cross-border operations.
Johnston also pointed to a 2010 Congressional Research Service report that found the cost to taxpayers of ensuring Mexican truck safety to be more than $500 million.
"Any accumulated savings in trucking costs enjoyed by shippers therefore should be weighed against the public cost of funding the safety inspection regime for Mexican long-haul carriers," the report stated, though it is not clear if the report included the more than $8.4 billion in penalties sought against the U.S. in those calculations.
The larger American Trucking Associations released a statement in support of the agreement and the end of what President and CEO Bill Graves termed "incredibly damaging" tariffs, though he worried about the continued use of taxpayer dollars to monitor Mexican trucks' compliance.
According to the terms of the agreement, Mexico will suspend 50 percent of its retaliatory tariffs within 10 days, and will suspend the remainder within five days of the first Mexican trucking company receiving U.S. operating authority.