Lack of participation threatens trucking program

Jun 1, 2012

A cross-border trucking pilot program between U.S. and Mexico, that ended a 17-year trade dispute between the countries, may be coming to an end if more Mexican rigs don’t start crossing the border into the U.S.

After more than 15 years of backand-forth negotiations, threatened lawsuits, retaliatory tariffs and other barriers, the U.S. and Mexico agreed last October to the program that would allow big trucks to cross the border and operate on each other’s highways.

But according to the Federal Motor Carrier Safety Administration (FMCSA), low participation by Mexican carriers in the cross-border trucking program could lead to the resumption of Mexican tariffs.

Since the program was announced last year, only three Mexican trucking firms are entering the U.S. under the pilot program.

Without more carriers participating, FMCSA cannot collect the safety data it needs to judge Mexican carriers’ safety, said William Quade, FMCSA’s associate administrator for enforcement and program delivery.

According to Quade, only 33 Mexican trucks have crossed since the U.S. opened its southern border to long-haul trucks in October.

In contrast, three U.S. companies have made more than 2,000 trips into Mexico since October, he said.

“Participation is not where we want it or need it to be to make it a viable program,” said Quade.

If the program fails, U.S. officials can no longer allow Mexican carriers into the country, which could result in Mexico reinstating tariffs.

“The agency is extremely concerned about not having sufficient data,” Quade told a subcommittee of the Motor Carrier Safety Advisory Committee, FMCSA’s main advisory board.

Under the agreement, the U.S. Department of Transportation (DOT) must evaluate the pilot program to determine whether or not it is safe to open the border to all trucks. However, with only three drivers and three trucks currently crossing into the U.S., officials say there may not be enough data to analyze the pilot program.

Prior to the agreement, Mexico had tariffs on over $2 billion in U.S. products in retaliation for its truckers being denied access to U.S. highways.

According to Ed Gerwin, a trade analyst with Third Way, U.S. and Mexican leaders will try to avoid a repeat of the trade war that has erupted before over trucking. Industries that have nothing to do with trucking could see significant impacts from another trade war.

“If Mexican trucks effectively can’t get into the United States, I’m sure the Mexicans would be tempted to go back to the same retaliation they had under the NAFTA [North American Free Trade Agreement] rules,” Gerwin said.

The original pilot program started with negotiations between U.S. President Barack Obama and President Felipe Calderon of Mexico. U.S. and Mexico have discussed opening the border to truck traffic for more than 17 years under NAFTA.

The U.S. has taken the role seriously, and examines each Mexican truck thoroughly to ensure safety, according to officials. There are more companies with applications pending, but it is a lengthy process.

Thirty companies have applied to be in the pilot program so far, which will operate for up to three years, according to the agency’s April 2011 Federal Register notice. But eight of the applications have been dismissed or withdrawn, Quade said. The U.S. and Mexico are working to get others to apply.

When FMCSA started the pilot program last year, it said it would need about 43 Mexican carriers to make 4,100 crossings during the three-year program.

There are U.S. companies that want to run more longhaul trucks across the border if transit gets easier.

Swift Transportation Co. currently operates a fullyowned Mexican subsidiary that drives trucks up to the border before handing trailers off to U.S. drivers.

But this is not the first time a program like this has been tested. FMCSA had a similar program in 2007, which ran for two years. That program also failed because it did not have enough participants. Mexico later collected tariffs on $2.4 billion of American imports, citing violations of NAFTA.

According to Quade, the larger Mexican trucking firms are not participating because of high insurance costs and uncertainty over the program’s long term probability.

“The lack of participation is what’s going to keep us from being able to say, ‘It’s OK to open the border to them,’” said Anna Amos, director of safety programs for FMCSA.

The NAFTA was signed between Canada, the U.S. and Mexico in 1994. But the trucking provision has been delayed repeatedly because of challenges from the Teamsters Union and other critics, primarily in the U.S.

Strong U.S. critics believe that Mexican trucks pose a safety hazard on U.S. highways and cost U.S. jobs.

During a meeting in February in Tijuana, U.S. officials met with trucking companies and emphasized that without significant Mexican involvement, U.S. DOT won’t have enough data to show that Mexican trucks can operate safely.

Members of Canacar, Mexico’s trucking chamber, complained that Mexican truckers face more stringent requirements than their U.S. counterparts under the current pilot project.

“The new program has way too many limitations, and that’s possibly why there aren’t enough carriers,” said Alfonso Esqur, Canacar’s representative, at the February meeting.

Juan Carlos Mu oz Mrquez, the national president of Canacar, added, “It is very complicated, it’s very expensive, and to tell you the truth, it hasn’t brought us any benefit.”

Mu oz is owner of Transportes Castor, one of Mexico’s largest trucking companies, which has not applied for the program. Like many owners of Mexican trucking firms, he works in tandem with a U.S. company. — Traci Eatherton, WLJ Editor