Let in the Mexican trucks
WASHINGTON — As Americans have traded more, they have become more prosperous. But there are always interests pressing to turn back the clock. So it is with the Teamsters Union, as it lobbies to close the United States to Mexican trucks.
Trade is economically beneficial. Economic ties with Mexico have proved to be no different. The US economy has boomed since January 1994, when the North American Free Trade Agreement went into effect. Exports to Mexico are up 170 percent, three times the overall export increase. US unemployment remains down by a third even as the economy slows.
Of course, some jobs have moved south of the border. But analysts estimate that at least 100,000, on net, have been created. Moreover, even when companies have moved, they have remained closely tied to US suppliers.
Mexico has, if anything, done even better economically. A quarter of its output is now shipped to America; employment is up by 3.5 million since mid-1995. Mexican prosperity is a plus for the US. Political freedom has followed economic freedom; last year the opposition won the presidency, ending Mexico's status as a one-party state. Moreover, only more jobs and higher wages will reduce the pressure for illegal immigration to the US.
Some Americans forget that trade is a two-way street. NAFTA generally lowered trade barriers both ways, including those to Mexican trucks. They were to have full access to the US by 1998, for an obvious reason: Why reload Mexican exports at the border? After all, Canadian trucks freely travel American roads. But the Clinton administration balked in response to Teamsters' pressure. Today, Mexican companies must stop 20 miles north of the border.
In February, a NAFTA arbitration panel ruled the US in violation of its treaty obligations. As the White House prepared to comply - drafting a plan to grant provisional licenses with the prospect of truck inspections and firm audits - the 1.4 million-member Teamsters Union secured a vote in the House to block the plan.
Senate Democrats are pushing their own restrictions. Mexican officials are now threatening retaliation against American fructose exports, which have been harming Mexican producers.
The Teamsters' argument has superficial appeal: safety. Who would want trucks from - shudder - a third-world country roaming American roads? True, six years ago, half of Mexican rigs failed US safety inspections. But the Teamsters are not high on US safety inspections. A quarter of American trucks failed the same tests. Moreover, last year the Mexican failure rate was down a third, to 36 percent, closer to US levels than the old Mexican rate. It might not be long before Mexican operations are safer than American firms.
The real issue is economic privilege. Trucking companies once used the Interstate Commerce Commission to stifle competition. Controlled by trucking interests, the ICC barred new entrants, enforced monopoly freight rates, and restricted competition. Often in the name of safety.
In the early 1980s, a bipartisan congressional coalition dismantled the trucking monopoly. Consumers were the unambiguous beneficiaries. Allowing Mexican trucks to travel directly from manufacturer to wholesaler would have much the same effect, encouraging competition and lowering costs.
No matter how prosperous we are, protectionism is tempting. The benefits are obvious: American jobs "saved." The costs - higher prices, poorer service, reduced innovation - are hidden throughout the economy. House members, with small constituencies, are particularly vulnerable to protectionism. But the Senate still has a chance to exhibit genuine statesmanship. And the Bush administration should remain firm, especially as its agenda comes under increasing attack from those who would use government to advance narrow interests.
Doug Bandow is a senior fellow at the Cato Institute.