July 11, 2011 4:00 AM, EDT

U.S., Mexico Set Cross-Border Trucking Agreement

Long-Delayed Deal Would End Punitive Tariffs
By Eric Miller, Staff Reporter

This story appears in the July 11 print edition of Transport Topics.

Top transportation officials of the United States and Mexico last week signed an agreement that will allow Mexican trucks to carry freight beyond border commercial trade zones, which will in turn prompt Mexico to remove $2.4 billion in retaliatory tariffs it imposed on U.S. products.

The agreement, which could go into effect as soon as next month, will end a 16-year dispute arising from the 1994 North American Free Trade Agreement requirement that Mexican trucks be allowed to travel throughout the U.S. to deliver and pick up freight.

The deal, signed on July 6 in Mexico City by U.S. Transportation Secretary Ray LaHood and Dionisio Arturo Pèrez-Jàcome Friscione, Mexico’s secretary of Communications and Transportation, also will allow U.S. truckers to travel to the interior of Mexico.

Some U.S. groups representing drivers and some legislators opposed the controversial pilot project agreement. One of these groups, the Owner-Operator Independent Drivers Association, on July 6 filed a lawsuit with the U.S. Court of Appeals for the District of Columbia Circuit asking the court to review “the validity of the pilot program.”

However, American Trucking Associations, other business groups and trade associations representing food and produce products affected by the tariffs hailed it.

The Mexican government had imposed the tariffs of 5% to 25% after Congress closed an earlier pilot program in 2009.

Under last week’s agreement, Mexico will suspend 50% of its retaliatory tariffs within 10 days of the signing and suspend the remainder within five days of the first Mexican trucking company’s receiving its U.S. operating authority.

Before starting up the three-year pilot, however, the Department of Transportation’s inspector general must send Congress an assessment of the agency’s readiness for the program. The audit could be completed by the end of July, Federal Motor Carrier Safety Administration officials have said.

Provisions contained in last week’s final agreement closely followed those detailed in a tentative accord FMCSA unveiled April 13 (4-18, p. 3).

The three-stage pilot calls for Mexican carriers to pass an initial 11-step safety check, including acceptable hours-of-service compliance and drug-and-alcohol testing plans.

Fleets that pass the initial check will be granted provisional authority and will be inspected each time one of their trucks enters the United States. The second stage requires a DOT performance evaluation and comprehensive review, and then, after 18 months of safe performance, a Mexican carrier could be granted permanent operating authority.

Motor carriers with provisional authority that participated in the 2007 pilot project and maintained safe operations will receive credit for the number of months they operated and will not be subject to stage-one inspections.

The agreement also calls for all Mexican trucks participating in the project to be supplied with electronic logging devices paid for by FMCSA.

In its announcement last week, FMCSA said it will accept the Mexican equivalent of the U.S. commercial driver license, but Mexican drivers will be required to be tested for drug and alcohol use at U.S. labs and must demonstrate proficiency in English.

ATA President Bill Graves said he welcomed the “historic agreement” that has “laid the groundwork for continued economic growth on both sides of the border.”

However, Graves said, “ATA has been, and continues to be, concerned with the expenditure of taxpayer dollars for equipment to be used to monitor Mexican carriers’ hours of service and track their movements in order to prevent domestic freight moves.”

Teamsters union President James Hoffa criticized the agreement, saying that opening the border to longhaul Mexican trucks endangers U.S. highway safety, border security and warehouse and trucking jobs.

“Opening the border to dangerous trucks at a time of high unemployment and rampant drug violence is a shameful abandonment of the DOT’s duty to protect American citizens from harm and to spend American tax dollars responsibly,” Hoffa said.

Rep. Peter DeFazio (D-Ore.), one of the leading congressional opponents of opening the border, introduced a bill the same day the agreement was signed that “puts the brakes on a bad deal for American truck drivers and the traveling public.”

DeFazio’s bill would prohibit the use of Highway Trust Fund dollars to pay for the electronic logging devices for Mexican trucks.

The bill also would require DOT to suspend the operating authority of all Mexican motor carriers when the pilot is ended and would require the agency to report the effect the program had on safety.

“Let the Mexican government or the Mexican carriers pay for their equipment, and let’s use U.S. gas tax revenue for its intended purpose of putting Americans to work rebuilding our roads and bridges,” DeFazio said.

OOIDA said small-business truckers and truck drivers were “fuming” about the pilot project.

“People in Washington are constantly talking about two things these days — creating good jobs for Americans and cutting wasteful spending. This program does exactly the opposite for both,” Todd Spencer, executive vice president of OOIDA, said in a statement. “This program will jeopardize the livelihoods of tens of thousands of U.S.-based small-business truckers and professional truck drivers and undermine the standard of living for the rest of the driver community.”

However, large business groups praised the deal.

Doug Goudie, director of international trade policy for the National Association of Manufacturers, said the agreement was “good news — if long overdue.”

“The NAM strongly believes that all countries need to uphold their international obligations, and that includes commitments made by the United States,” Goudie said in a statement. “We need to press other countries hard to live up to their agreements, but we cannot expect them to comply if we don’t. Resolution of the trucking dispute and removal of retaliatory tariffs is a very positive development.”

Likewise, Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, commended the administration for successfully completing the agreement.

“If we’re going to boost U.S. exports and create jobs here at home, we must hold on to our major export markets such as Mexico, where American companies are already doing well,” Donohue said. “Today’s news will help American businesses to do just that.”