End in Sight to US-Mexico Trucking Dispute

9 March 2011

Washington has agreed to lift a longstanding ban on allowing Mexican trucks to operate on US soil, a move that would end a dispute that has hampered trade relations between the two countries for years.

The deal, announced last Thursday after a meeting between Presidents Barack Obama of the US and Felipe Calderon of Mexico, would have Mexico suspend 50 percent of the retaliatory tariffs it has been levying on certain US goods upon Congressional approval of a plan to allow Mexican trucks to operate in the US. The rest would be lifted once the first Mexican carrier stars operating in the US, according to a US trade official.

The trucking dispute has been a point of contention in the bilateral trade relationship since the start of the North American Free Trade Agreement involving the US, Mexico, and Canada in 1994.  Under that agreement, the US agreed to allow cross-border trucking. However, it has failed to open its border to Mexican trucking, citing concerns over the ability of Mexican trucks to meet safety and environmental standards.

Mexico was granted the right to retaliate in the form of punitive tariffs on US goods after a NAFTA dispute panel ruled in its favour in the late 1990s.  It began to impose duties in 2009, after Washington eliminated funding in 2009 for a George W. Bush-era pilot program designed to allow the eventual phase in of Mexican cross-border trucking.  The duties, which have amounted to $2.4 billion, have applied to goods like pork, cheese, corn and even Christmas trees.

The pact will require participating Mexican truck drivers to meet US safety standards, including drug tests and English language requirements. It also mandates on-board electronic recorders that track the truckers' hours to ensure compliance with US hours-of-service and related laws.

US labour unions, however, have decried the deal, arguing that it will undermine safety and threaten jobs.  The trucking deal "caves in to business interests at the expense of the travelling public and American workers," said Jim Hoffa, the president of the International Brotherhood of Teamsters, the organisation that represents unionised US truckers.

Business groups, on the other hand, praised the lifting of the ban as an important signal that the US is adhering to its obligations under global trade agreements.

The removal of Mexican sanctions on US goods would be in line with the White House's goal of increasing US exports.

The US Transportation Department hopes to have proposed rules for Mexican trucks to operate in the US ready for Congressional briefing and public comment by the end of March or early April. Mexico said on Sunday that it hopes to have its first truck on US roads in about four months.

ICTSD reporting: "Obama close to Mexican trucks deal," FINANCIAL TIMES.COM, 4 March 2011; "Mexico, US announce plan to end border trucking dispute," BLOOMBERG, 3 March 2011; "Mexican trucks ready to cross into US territory," REUTERS, 6 March 2011; "Mexico to reduce tariffs on US goods by 50 percent to help end trucking dispute," BLOOMBERG, 6 March 2011; "US, Mexico agree to settle truck feud," THE WALL STREET JOURNAL, 4 March 2011.

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