Infrastructure investments designed to allow Mexico to competeBy Peter A. Buxbaum, AJOTEarlier this month, Mexican President Felipe Calderon and U.S. President Barack Obama announced, after a meeting in Washington, the terms of a new deal that would open up the border between the two countries to commercial trucks. The transportation agreement, which would also resolve a long-standing trade dispute that involves hefty Mexican tariffs on U.S. goods shipped over the border, is expected to lower transportation costs between the two countries and enhance exports. The agreement could also boost Mexico’s ambitions to become a North American logistics center, to match its growing manufacturing sector. The government of Mexico has embarked on a multi-billion dollar program of investments in logistics infrastructure, including roads, rail, and the Lazaro Cardenas seaport, which it aims to transform into the second largest on North America’s Pacific coast. The dispute over cross-border trucking between Mexico and the United States dates back to the North American Free Trade Agreement of 1995. Under NAFTA’s terms, U.S. and Mexican trucks were to be allowed to transport goods back and forth across the border at the agreement’s outset, but security concerns and union pressures caused the U.S. to prohibit Mexican trucks from having full access to U.S. roads. The ban on Mexican vehicles sparked a 15-year-long trade standoff. A pilot program was launched in 2007 to monitor the safety of Mexican trucks and gradually introduce them onto U.S. highways, but funding for the program was eventually cut. In response, Mexico imposed $2.4 billion in tariffs on U.S. goods in 2009. A year later, an additional round of tariffs ranging from 5 percent to 25 percent was introduced on a variety of American food products. The U.S.-Mexico cross-border truck trade is growing. U.S. imports from Mexico by truck totaled $12 billion in December 2010, a 16.3 percent increase from December 2009. U.S. exports to Mexico by truck exceeded $9 billion during the same month, up 18.7 percent from December 2009. The two countries have a nearly $400 billion annual trading relationship. The government of Mexico says that it will lift 50 percent of the tariffs as soon as the new deal to open access is signed, and will suspend the remaining 50 percent when the first Mexican carrier is granted operating authority under the program. The program agreed to by the two governments will proceed in three stages: the first requires Mexican truck operators to file applications and receive inspections in order to become accredited; the second requires a three-month period of inspections for every vehicle crossing the border for a company to earn certification; and the final stage involves issuing permanent authorizations to Mexican trucking firms after 18 months of successful operation. Despite the strict requirements for gaining access to U.S. roadways, labor unions, which have long backed the ban on Mexican trucking, remain opposed to the agreement, while trucking interests and manufacturers and back the agreement. “This deal puts Americans at risk,” said Jim Hoffa, president of the International Brotherhood of Teamsters. “This agreement caves in to business interests at the expense of the traveling public and American workers. Why agree to a deal that threatens the jobs of U.S. truck drivers and warehouse workers when unemployment is so high?” As for Mexico’s imposition of tariffs on U.S. goods, Hoffa asserted that “the administration should have brought a challenge against Mexico for imposing excessive tariffs on U.S. goods instead of agreeing to open the border to unsafe trucks.” Hoffa also claimed that the trade agreement benefits Mexico but not the United States. “Given the drug violence, there’s no way a U.S. company would want to haul valuable goods into the Mexican interior,” he said. “Trade agreements are supposed to benefit both parties, but this is a one-way street. “We continue to have serious res