U.S.-Mexico Trucking: A Welcome First Step

Jan 6, 2011

by John Murphy

U.S. Chamber President Tom Donohue issued the following statement regarding the administration's release of a proposal to resolve the U.S.-Mexico cross-border trucking dispute:

"Today's news that the administration is taking a first step toward resolving the long-running U.S.-Mexico trucking dispute is very welcome. If we're going to double exports within five years, we must hold on to export markets, such as Mexico, where American companies are already doing well.

It's time that we complied with the promise we made to allow carefully inspected trucks to move across the border. We will closely study the U.S. proposal and hope we can help implement a modern cross-border transportation system that provides certainty for trucking companies and shippers throughout North America.

We urge the administration to work expeditiously with the Mexican government to reach a  mutually agreeable solution, and we urge Congress to support this effort to end the dispute."

For those of you who haven't followed this issue closely, here's some background. This long-running dispute has become a national embarrassment -- and a serious threat to U.S. competitiveness.

Today, a shipment traveling between the U.S. and Mexico requires three trucks and three drivers -- a U.S. carrier, a Mexican carrier and a middleman known as a drayage hauler.

Border communities can attest to the added congestion this system generates. When three trucks do the work of one, many are forced to spend time idling near warehouses or border crossings, adding to air pollution.

And trucks often return home with empty trailers or no trailer at all. It doesn't take a logistics genius to see that this spells higher costs.

According to the U.S. Department of Transportation, all of this extra loading, warehousing and unloading adds $400 million per year to the price of goods. That bill is then passed to the consumer.

When the U.S. negotiated NAFTA, we pledged to open our border to Mexican trucks with full reciprocity for U.S. carriers. This commitment was supposed to be fully implemented by 2000. After years of foot-dragging on both sides, Washington and Mexico City finally launched a pilot project in 2007. This allowed a small number of Mexican trucks to make pickups and deliveries beyond the 25-mile border zone and a similar number of U.S. trucks to make deliveries south of the border.

Every Mexican truck entering the U.S. was required to meet every U.S. safety requirement. These Mexican rigs were probably the most inspected in the world.

The record under the pilot project was clear. More than 46,000 crossings took place without a single incident. After 18 months, an independent evaluation panel found the Mexican carriers were as safe as their U.S. counterparts.

In March 2009, Congress terminated the pilot project, signaling a refusal to comply with U.S. obligations under NAFTA. Mexico responded by imposing punitive tariffs on U.S. exports, as permitted by a February 2001 NAFTA dispute settlement panel. These tariffs range from 10 percent to 45 percent, and they affect $2.4 billion worth of U.S. exports to Mexico.

What's at risk? Mexico is the second-largest U.S. export market in the world. Under NAFTA, merchandise trade with Mexico has quadrupled, from $81 billion in 1993 to $380 billion last year. Trucking is vital to this trade partnership because it moves about 70 percent of these goods.

But the danger posed by this action is even larger than our remarkable trade ties to Mexico. Simply put, the U.S. has refused to keep its word.

In the wake of a sharp economic downturn, with protectionism rearing its ugly head around the globe, the U.S. should lead by example. As the world's largest exporter, the prospect of rising trade barriers poses a greater threat to the U.S. than any other country.

The Chamber is committed to working with the administration, Congress and the Mexican government on this issue. It's time to make cross-border trucking a reality. It's time we kept our word.

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