Mexican trucking pilot program removes tariffs

Oct 24, 2011

The Department of Transportation (DOT) reported that the Federal Motor Carrier Safety Administration (FMCSA) has completed the required steps to allow Mexican trucks to operate in the U.S. under the North American Free Trade Agreement (NAFTA) and has granted authorization to a Mexican carrier to make U.S. deliveries.

Since 1995, the U.S. has been in default of NAFTA because of the Mexican

trucking controversy. Part of NAFTA includes a crossborder program that allows U.S. trucks to deliver products to customers in Mexico while Mexican shippers are allowed to do the same in the U.S.

In March 2009, Mexico retaliated with tariffs of $2.4 billion on U.S. goods following U.S. suspension of the 2007 pilot program that would have allowed Mexican trucks across the border.

The pilot program ran into opposition from U.S. transportation unions and Congress eventually blocked it by denying funding in spending bills.

The Mexican government has agreed to eliminate the tariffs when Mexican truckers are able to gain U.S. operating authority similar to that held by Canadian truckers, who may haul international freight to and from the U.S., but not U.S. domestic cargo. President Barack Obama’s administration in March agreed to allow Mexican trucks full access to the U.S. market as part of a deal to end the tariffs.

DOT Secretary Ray La- Hood testified earlier this month that DOT has now fully addressed the outstanding issues relating to the pilot program and the issues reported in a DOT Office of the Inspector General report. According to the reports, the U.S. surveillance program for Mexican trucks is tough and includes safety audits, monitoring and extensive training of the audit staff in both Mexico and the U.S., that has to be implemented before the pilot program is started.

According to DTN’s Washington Insider, DOT’s report to Congress addressed each of these points, including the establishment of a system that will track Mexican trucks in the U.S. through a “Query Central” system that allows DOT and state and local law enforcement officials to access federal databases for information.

DOT also has visor cards for participating motor carriers and it has awarded a contract for electronic monitoring devices. No vehicles will be allowed to participate in the program without this equipment being installed and operational, according to reports.

DOT also told Congress that it has trained all of its auditors who are responsible for pre-authorization safety audits, and for inspections of participating carriers, drivers and vehicles. In addition, the department will review the complete driving record of each driver and require drug-testing samples to be analyzed in U.S. laboratories, and assess drivers on their ability to understand English.

While Mexico dropped the tariffs by half last July when the governments reached the original agreement, the other half, $1.2 billion, was dropped after DOT granted operating authority to the first Mexican carrier under the program.

According to a Texas A&M University study, up to 12,000 U.S. jobs, primarily affecting agriculture, could be restored with the lifting of the tariffs.

Worried about loss of jobs and unsafe Mexican trucks, U.S. truck-driver unions and other groups persuaded congress to end funding in 2009. The Teamsters Union and other groups have filed a lawsuit to stop the current program, Teamsters General President Jim Hoffa said last week.

Transportes Olympic was the first Mexican carrier to receive U.S. operating authority, according to DOT.

The carrier is based in Apodaca, and ships steel products and building materials.

Another Mexican carrier, Grupo Behr of Baja California, will have to wait to join the program until regulators review objections raised against its application by the Owner-Operator Independent Drivers Association and the Teamsters Union. According to the Teamsters Union, the carrier is a “flyby-night Tijuana operation with one semi-tractor trailer junker that the U.S. designated a ‘gross polluter.’ ”

Advocates, a Washingtonbased watchdog group, and the Teamsters cited FMCSA data showing that Grupo Behr had a higher than average incidence of its vehicles being ordered off the road. The company had 40 vehicle violations in two years, Advocates said. The owner-operators said Grupo Behr’s inspections indicated a lack of systemic maintenance.

Three U.S. trucking companies—Plastic Express in California, A&R Transport Inc. in Illinois, and Stage Coach Cartage & Distribution LP in El Paso—already have been granted permits to haul international cargo in Mexico.

So far, seven Mexican long-haul carriers, including Transportes Olympic, have applied to make U.S. deliveries, according to a notification in September from DOT to the Free Trade Alliance.

Without cross-border trucking, U.S. and Mexican carriers must halt international shipments at the border. Short-haul trucks, called drayage, carry containers across the border so that another trucking company can complete the delivery. — Traci Eatherton, WLJ Editor