March 9, 2011: President Obama and Mexican President Felipe Calderón March 3 announce their agreement on a “path” toward resolving the protracted North American Free Trade Agreement cross-border trucking dispute with Mexico and the eventual lifting of retaliatory Mexican tariffs on over $2 billion in U.S. goods.
At a joint press conference with Calderón after a White House meeting, Obama said he was “especially pleased” that the two sides have found a “clear path” to resolving the trucking dispute.
“I look forward to consulting with Congress and moving forward in a way that strengthens the safety of cross-border trucking, lift tariffs on billions of dollars of U.S. goods, expands our exports to Mexico and creates jobs on both sides of the border,” Obama said.
The agreement in principle contemplates a reciprocal, phased-in program with the highest safety standards authorizing both Mexican and U.S. long-haul carriers to engage in cross-border operations under NAFTA, the fact sheet said.
U.S. and Mexican negotiators are continuing to iron out details and expect to have a draft final agreement “very soon,” according to a White House fact sheet.
As soon as all of the details are in place, the administration will confer with Congress and publicly share the proposed agreement and seek comment, the White House said.
Through an interpreter, Calderón said Mexico's objective has always been to reach a solution that's mutually acceptable.
Meeting Same Safety Standards
According to an American Trucking Associations press statement, the tentative agreement upholds the requirement that Mexican fleets apply for and receive authority from the Federal Motor Carrier Safety Administration. The ATA said Mexican trucks must also meet the same safety standards as U.S. fleets.
Once a final deal is reached, Mexico will suspend retaliatory tariffs it imposed in stages. When the agreement is signed, Mexico will reduce tariffs by 50 percent and will suspend the remaining 50 percent after the first Mexican carrier is granted operating authority under the program. All current tariffs will be ended by Mexico once the program is in place.
“The agreed schedule will not affect the rights and obligations of Mexico or the United States under the NAFTA, including Mexico's right to apply its retaliatory measures,” the fact sheet said.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) said he looked forward to seeing the administration proceed rapidly on the path laid out, noting that U.S. exporters have paid over $4 billion in extra duties since the retaliation has been in effect.
“I am encouraged by today's announcement that the United States and Mexico have made progress toward putting in place a cross-border trucking pilot project that will allow Mexico to lift its retaliatory tariffs on U.S. exports,” Camp said in a written statement.
Similarly, Ways and Means Trade Subcommittee Chairman Kevin Brady (R-Texas) said American workers are being hurt every day the tariffs continue. He encouraged the administration to implement the plan as soon as possible.
Blocked Since 1995
Since 1982, Mexican trucks have been allowed to travel up to 25 miles across the U.S. border.
NAFTA had called for cross-border trucking to be phased in beginning in 1995. However, the provision was blocked by the Clinton administration and Congress, which had routinely prevented the provision from moving forward by denying funding in spending bills, citing safety concerns about Mexican trucks on U.S. roads.
In 2007, The Bush administration launched a pilot program to comply with the NAFTA provisions. However, Congress cut off funding and the pilot program was shut down in 2009.
The standoff led Mexico to impose the retaliatory tariffs on $2.4 billion worth of U.S. products in March 2009, including key agricultural exports such as pork, because of U.S. noncompliance with NAFTA trucking provisions (50 DLR A-5, 3/18/09). Mexico subsequently revised the tariff list. The new list of 99 items targeted U.S. products with greater exports to Mexico than the previous list of 89 goods in order to increase the impact on the United State (158 DLR A-4, 8/17/10).
After the dispute had languished for years, Transportation Secretary Ray LaHood early this year unveiled an “initial concept document” to Congress and the Mexican government on a new long-haul trucking program, accompanied by safety inspections, for Mexico (4 DLR A-1, 1/6/11). Mexico welcomed the initial concept paper but did not lift the retaliatory tariffs. However, the Mexican government indicated at that time that it would not rotate the tariff list.
IBT Condemns Action; Business Interests Pleased
The International Brotherhood of Teamsters has been at the forefront in fighting the border opening and issued a strong condemnation when the tentative deal was announced. “This deal puts Americans at risk,” Teamsters General President Jim Hoffa said in a March 3 news release. “This agreement caves in to business interests at the expense of the traveling public and American workers.”
“Why agree to a deal that threatens the jobs of U.S. truck drivers and warehouse workers when unemployment is so high? And why would we do it when drug cartel violence along the border is just getting worse?” he said.
The Owner-Operator Independent Drivers Association (OOIDA) also slammed the announcement. “Simply unbelievable,” Todd Spencer, executive vice president of OOIDA said. “For all the president's talk of helping small businesses survive, his administration is sure doing their best to destroy small trucking companies and the drivers they employ.”
The Teamsters, OOIDA, and a GOP aide said they do not have any further details on the tentative proposal.
However, business interests, including U.S. Chamber of Commerce, the National Foreign Trade Council, and the National Association of Manufacturers welcomed the announcement.
The American Trucking Associations also welcomed the agreement in principle. “We hope this agreement will be a first step to increasing trade between our two countries, more than 70 percent of which crosses the border by truck,” ATA President and CEO Bill P. Graves said.
“This is an important step to promote job growth on both sides of the border and shore up our bilateral relationship,” U.S. Chamber of Commerce President and Chief Executive Officer Thomas Donohue said in a March 3 statement. “We are now pressing the Administration and Congress to finalize the agreement, move the United States into compliance, and allow an end to these job-killing tariffs. This will be a major step toward providing certainty to trucking companies and shippers throughout North America.”
NAM Senior Vice President for Policy and Government Relations Aric Newhouse said that the United States, as a global leader in ensuring enforcement of trade laws, needs to lead by example by complying with NAFTA obligations on Mexican trucks.
By Rossella Brevetti