Cross-border commerce hit another red light late Tuesday when the Senate eliminated a pilot program that allowed some Mexican companies to ship goods deep into the United States.
The $410 billion spending bill approved by senators Tuesday and scheduled to be signed by President Obama Wednesday eliminated funding for the controversial program and could reinforce concerns that the US is turning to protectionism as it fights its deepest recession in decades.
“The US government puts a lot of limits on our trucks in the border states so they can’t get in,” says Mr. Velasco Perez, who is a member of the Transportation Committee in the lower house of Mexico’s Congress.
He said his party would meet with Mexican trucking organizations to discuss pushing through “reciprocal measures.” In statements to the press last week, Arturo Sarukhan, Mexico’s ambassador to the US, labeled the measure “protectionism” and threatened to take retaliatory action.
'Buy American' push
The move to bar Mexican trucks follows the “Buy American” provision in the $787 billion stimulus bill approved by Congress Feb. 18, which could require stimulus spending to go to US-made products. The provision has been criticized in Latin America and Canada, and analysts say rising protectionist sentiment could hurt global economic recovery efforts.
While free-trade advocates fear the creation of new trade barriers, the Mexican truck impasse is well over a decade old.
US authorities have repeatedly delayed implementation of North American Free Trade Agreement (NAFTA) rules that would have granted Mexican truckers access to border states in 1995 and nationwide in 2000. The US has refused to budge even following the decision of a NAFTA arbitration panel in 2001, which ruled that the US is required to grant access.
Now, with the economy faltering and fewer trucks lined up at border checkpoints, it’s unclear when – or if – the issue will finally be resolved.
“If there was a great demand, and an economic boom, then maybe [this would get fixed],” says Gustavo Del Castillo Vera, a researcher for the College of the Northern Border in Tijuana. “But with things as they are right now, it doesn’t make much difference.”
The program’s supporters say that allowing Mexican trucks to ship into the US, and vice versa, would cut both shipping times and costs for consumers.
Currently, goods headed north and south cross the border and then are transferred to new vehicles for the journey to their final market. The process is time-consuming for exporters and creates higher costs.
Unions weigh in
But US groups such as the Teamsters union, the Sierra Club, and Public Citizen, a consumer-watchdog organization, oppose giving Mexican trucks access to US highways. They say Mexican trucks are more dangerous than US trucks and that they pollute more.
Mexican trucking groups, meanwhile, say the playing field is uneven, arguing that inspections of Mexican vehicles are unfairly discretionary and that their insurance costs are higher.
The Mexican vehicles inspected under the pilot program performed well in US inspections, but researchers say the sample size allowed into the US was too small to make any definitive conclusions about the safety of Mexico’s fleet of trucks.
According to Canacar, Mexico’s trucking industry organization, 27 Mexican companies currently have 104 vehicles registered in the program, while 10 US firms have 52 vehicles registered to work within Mexico. The program was expected to allow up to 100 companies and 500 trucks from each country to participate.
“Neither country is really interested in making it go forward,” says Mr. Del Castillo, adding that any retaliatory measure by Mexico would likely be counterproductive, since trade is already dropping.
Oscar Moreno, executive director of Canacar, says the program was poorly designed from the beginning.
“The program’s objective hasn’t been met, and this is reflected in the low participation of both Mexican and US companies,” Mr. Moreno said. “It seems the blocking of funds is maybe the hammer finally dropping on a program that wasn’t working.”