Mexican Fleets Ask for Damages as Groups Seek Border Solution

This story appears in the April 13 print edition of Transport Topics.

The U.S.-Mexico trucking dispute continued to grow as more legal action was taken on both sides of the border and a coalition of interest groups stepped up pressure on the Obama administration to find a resolution.

Canacar, Mexico’s primary trucking association, served formal notice April 2 it was seeking monetary damages from the United States for violations of the North American Free Trade Agreement.

In the United States, the Owner-Operator Independent Drivers Association asked a federal court to keep open a suit and issue a ruling on whether the Department of Transportation can declare Mexican regulations equal to U.S. rules.

Also, a group of 141 industry groups and companies, including the U.S. Chamber of Commerce and the American Farm Bureau Federation, sent a letter to President Obama and DOT urging them “to work with Congress and quickly resolve the Mexican trucking issue to end retaliatory tariffs.”

Mark Maney, the attorney representing Canacar, told Transport Topics that while the Mexican government can get restitution in the form of tariffs or sanctions, the Mexican trucking group was seeking “billions of dollars” in damages.The association — officially Camara Nacional del Autotransporte de Carga — said, “Mexican carriers have a substantial economic advantage of their U.S. counterparts — Mexican drivers make materially less than U.S. drivers.”

“If the United States complies with its NAFTA obligations, it would open up a huge market for Mexican carriers to utilize their competitive advantage,” the group said.

Canacar’s suit says that, by closing the border, the United States violated NAFTA by singling out Mexican carriers for additional scrutiny and by preventing Mexican companies from investing in U.S. trucking firms. The Mexican government estimated the closure of the border to trucks causes roughly $2 billion annually in damages to the Mexican trucking industry and the economy.

“If NAFTA were implemented, for a small investment, Mexican carriers could carry international cargo anywhere within the United States,” Canacar said.

The U.S. State Department replied in a statement that it “intends to defend this claim vigorously.”

The United States now must name an arbitrator, who will, in consultation with an arbitrator chosen by Canacar, pick a third panelist.

Maney said there are no firm rules governing how long the panel has to hear the case, but it will take “certainly more than a year, but hopefully less than two.”

Meanwhile, OOIDA’s most recent filing with the U.S. Court of Appeals for the 9th Circuit claims its prior dispute is still alive, even though the pilot program the litigation was aimed at stopping has been terminated.

“The terms under which [DOT] must entertain applications for operating authority by Mexico-based motor carriers need to be resolved,” the group said. “This is true whether [DOT] were to proceed with another pilot program in fiscal year 2010 or on the basis of its general authority” under federal law.

The Justice Department said that because the pilot program ended, the suit should be thrown out. If DOT launches a new program, it would raise different issues, Justice said.

The April 2 DOJ brief also said existing law requires DOT to conduct a pilot project before opening the border, and “any new DOT authorization of longhaul, cross-border trucking would, without prior completion of a pilot program, require new legislation lifting the restriction.”

While the legal process continues, officials on both sides of the border are pressuring the White House to solve the dispute.

On Capitol Hill, Sens. Ron Wyden (D-Ore.) and Mike Crapo (R-Idaho) circulated a letter to the White House saying “it is crucial that prompt action must be taken to eliminate the tariffs.”

In Mexico, Beatriz Leycegui, undersecretary for foreign commerce, told Bloomberg News that the country hopes the $2.4 billion in tariffs it imposed last month will move the United States to “resolve the controversy” and warned it could expand the levies to more products.

Earlier this month, U.S. interest groups met with Transportation Secretary Ray LaHood as the department worked on a set of principles for legislation to reopen the border.

A spokeswoman told TT that DOT on April 8 delivered those principles to the National Security Council, which includes the secretaries of State, Homeland Security and other federal agencies.

DOT has said it will seek congressional approval for a new trucking program, but observers believe such approval is unlikely.

“I don’t see a change coming,” House Speaker Nancy Pelosi

(D-Calif.) in an April 3 interview with the Dallas Morning News. “The president may have some other views, and we’ll see what he has to say about it. But I don’t see any change.”