[CTC] USTR considering a carveout for cross-border trucking services in NAFTA

[Arthur Stamoulis]

INSIDE US TRADE

USTR considering a carveout for cross-border trucking services in NAFTA
The U.S. is considering requesting a carveout for cross-border trucking services in a retooled North American Free Trade Agreement, sources said, a move that could lead to the end of a controversial trucking program that allows Mexican carriers to operate in the U.S.

Multiple sources said USTR is mulling language in NAFTA that would allow the U.S. to come forward later with measures that restrict Mexican truck access in the U.S. Opponents of the trucking program are pushing for the U.S. to carve out cross-border trucking services in Annex II of the deal and specify that the sector is not subject to NAFTA's national treatment provisions. Annex II covers reservations for future measures.

The administration has not specified whether it will seek an Annex II reservation on trucking or attempt to carve out cross-border trucking services another way, sources said. One source professed to be “cautiously optimistic” the U.S. would find some way to carve out the sector, while another said the administration was looking at “broad language” to exclude the sector from NAFTA that would allow the U.S. to come forward with domestic measures that could impact Mexican truck access without being in violation of the agreement.

At the center of the issue is a U.S. program that allows certain Mexican long-haul trucks to operate beyond the established U.S.-Mexico border commercial zone, which extends about 20 miles beyond the border. As a result of a pilot program implemented by the Obama administration, 34 Mexican domiciled carriers are licensed to operate beyond the commercial border zone. The pilot program was enacted in 2011 in response to retaliatory tariffs Mexico instituted in 2009 on a variety of U.S. products.

The Teamsters union claims the trucking pilot program has allowed Mexican carriers to operate in the U.S. without having to meet minimum U.S. safety requirements.

In a speech on the House floor on Oct. 3, Rep. Peter DeFazio (D-OR) said the trucking issue should be a top priority for the Trump administration during the fourth round of NAFTA talks, set to begin next week.

“The Trump administration is approaching this issue perhaps as early as next week in the NAFTA negotiations, and this should be at the top of their agenda,” DeFazio said.

DeFazio is among the nearly 20 members of Congress who have written to U.S. Trade Representative Robert Lighthizer in recent months urging him to address the trucking program in the context of the NAFTA renegotiation.

U.S. trucking groups are at odds over the provision, with the Owner-Operator Independent Drivers Association (OOIDA) and Teamsters urging Lighthizer to seek the Annnex II carveout and the American Trucking Association calling for Lighthizer to maintain the cross-border trucking program. Teamsters President James Hoffa this week echoed DeFazio's comments in saying that the trucking issue should be a priority of the Trump administration.

“At the top of the agenda is fixing the mistake of including long-haul trucking in the original NAFTA,” Hoffa said in an Oct. 4 op-ed in the Detroit News. “The Teamsters have briefed U.S. and Canadian officials on suggested language that would provide a level playing field, improve truck safety and boost working conditions and wages for Mexican drivers. This issue must be addressed in these negotiations.”

In a Sept. 28 letter, OOIDA urged Lighthizer to secure the Annex II carveout because it would end the “unsafe” and “nonreciprocal” program.

“OOIDA, in conjunction with the International Brotherhood of Teamsters, requests that the Office of the United States Trade Representative include long-haul trucking as an exempted service in Annex II of the NAFTA renegotiations,” OOIDA Executive Vice President Todd Spencer wrote. “This fix would restrict access to Mexican trucks beyond the Border Commercial Zones and end the unsafe, nonreciprocal trucking program currently in place. We hope that NAFTA 2.0 will keep our highways safe from trucks and drivers that do not meet our regulatory standards.”

Spencer also said the U.S. trucking industry cannot benefit from reciprocal access to the Mexican market because its unsafe for U.S. carriers to operate there.

“Mexico’s promise of an equally open border and nationwide access to U.S. motor carriers and drivers is, for all practical purposes, illusory,” he wrote. “Since the original agreement, the Mexican border territory has become more dangerous due to drug smuggling and gang violence, providing little incentive for U.S. carriers to engage in business there. The state of Mexico’s infrastructure and the absence of police security in Mexican states far outweigh any economic incentive there might otherwise be to move freight south of the border. Additionally, Mexican trucks have been a conveyance for contraband and undocumented immigrants.”

In an interview with Inside U.S. Trade, Spencer said U.S. carriers can't operate in Mexico because U.S. trucks must be outfitted with a filter that requires trucks to use ultra-low sulfur diesel fuel, which is not readily available in Mexico beyond the border commercial zone.

The American Trucking Association, meanwhile, called for Lighthizer to maintain the trucking program as a means to alleviate border congestion.

“NAFTA’s trucking provisions help reduce border congestion. Congestion increases without NAFTA’s trucking provisions because trailers often return empty after delivering freight across the border,” ATA Chief Economist Robert Costello wrote in a Sept. 29 letter to Lighthizer. “As the industry looks well into the future, this provision will be more important as trade increases. It would be shortsighted to end the program now.”

Costello told Inside U.S. Trade that ATA has made its case to the administration but has not received a response from USTR -- or an indication as to whether it intends to carve out cross-border trucking services in NAFTA. Costello also downplayed the economical significance of the Mexican trucking program, saying that of the 500 to 600 drivers who participate in it, half work for Trans-Mex, which is owned by a U.S. trucking company.

Mike Dolan, a legislative representative for the Teamsters, said there are other ways to alleviate border congestion, such as investing in infrastructure that does not require Mexican carriers to operate beyond the border zone. -- Brett Fortnam (bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com>)

 
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