In 2007, a pilot cross boarder trucking program was implemented with Mexico. The purpose of the program was to bring the United States into compliance with the North American Free Trade Agreement (“NAFTA”). Under the program, up to 500 Mexican trucks from 100 operators were permitted into the United States. Prior to program, the United States prohibited most Mexican trucks from driving outside of commercial zones, which were about 20 miles, or 75 miles in Arizona, beyond the border. Canadian truckers did not, and currently do not, have any travel restrictions within the United States.
The pilot program was stopped on March 12, 2009. Most Mexican truckers are now prohibited from carrying goods into the United States. As can be well imagined, there has been diverging views and very heated opinions over this course of action. One thing is for certain, this might be the relative calm before the storm.
According to government officials, the funding for the program was terminated because not all of the Mexican trucking companies operating in the United States met U.S. safety standards. The current administration appears amenable to a replacement program; however, there are numerous safety issues that must be addressed before the Mexican truckers are allowed back into the United States.
U.S. truck driver organizations, unions, and owner-operator independent drivers are currently opposed to a cross boarder trucking program. These groups have two primary concerns over such a program: safety and low labor costs. There is a widespread belief that Mexican trucking companies are not as safe as U.S. trucking companies because they have allegedly failed to meet U.S. safety standards for several years. These groups are also concerned that a cross boarder trucking program would result in a net loss of American jobs because Mexican labor costs are much less than in the U.S.
CANACAR, a trade association representing individual carriers within the Mexican trucking industry, naturally opposes the repeal of the cross-border trucking program. They believe the action is a clear violation of NAFTA and a veiled attempt to protect US jobs. The Mexican government asserts the repeal of the program will cost Mexico more than $2 billion a year and has therefore instituted $2.4 billion in tariffs on goods transported from the United States into Mexico. The tariffs range from 10 to 20 percent on items such as fruits, vegetables, wine, juices, sunglasses, toothpaste, and coffee.
On April 2, 2009, CANACAR filed Notice of Arbitration against the United States pursuant to NAFTA Article 1116 in an attempt to resolve the dispute. CANACAR alleges the United States Department of Transportation restricts Mexican trucking operations within the United States and Mexican investment in U.S. carriers, thereby violating NAFTA Articles 1102 (national treatment), 1003 (most favored nation treatment), and 1105 (minimum standard of treatment). According to the arbitration brief, CANACAR is seeking “billions of dollars in damages”.
The United States government denies the allegations and intends to vigorously defend this claim. They have also stated the current administration has instructed Congress, the Department of Transportation, and the State Department to work with Mexican officials to draft legislation creating a new cross boarder truck program that will quell Congressional concerns and comply with NAFTA.
Despite the diverging opinions on this issue, one thing is certain: the litigation flood gates are about to open.
