“Every day along the world’s busiest border, an expensive and time-consuming pantomime is acted out.” So begins the Economist’s coverage of the trucking agreement recently announced between Mexico and the United States. From that smart opening line the paper slips into an uncharacteristic fit of naïveté, arguing that Mexico stands to chalk major gains from the new transportation agreement. To recap, here are the highlights of the NAFTA trucking agreement:
• NAFTA promises that truck drivers from each country will have access to one another’s border states in 1995. Truckers were slated to have nationwide access by 2000.
• The Clinton administration halted implementation of the trucking provision under pressure from the International Brotherhood of Teamsters: the trucker’s union claimed that Mexican trucks were unsafe.
• In 2007 the Bush administration allowed a trial run, whereby 100 Mexican truck companies would be permitted to haul cargo deeper into the US.
• Congressional and private sector studies concluded Mexican trucks in the US received fewer safety violations than their American counterparts.
As the Teamsters original objections grew untenable the union shifted tactics: they now insist that letting Mexican trucks into the US will be a green light for drug traffickers to move their product into the US.
• President Obama scotched the trial program a few months after entering office.
• In accordance with a NAFTA panel ruling, Mexico leveled tariffs against 90 different US products, affecting some $2.4 billion in goods across 40 states.
Mexican goods accounted for 12% of US imports in 2010. That’s a record high, and the Economist sees it as a basis for expanded Mexican trade with the US. Seventy percent of the trade between the US and Mexico is transported by truck, so a fleshed out trucking agreement could significantly boost trade. But the devil is in the details.
According to Refugio Muñoz, head of Mexico’s shipping chamber, only about 115 of Mexico’s 400,000 trucks will be able to cross the border because of strict security regulations. “I see no future with this program,” Muñoz told the Alaska Dispatch (“News from the Last Frontier”). “The only thing this accord does is give Mexico an excuse to remove tariffs.”
In fact, Mexico dropped half the retaliatory tariffs immediately; the remaining half will be dropped when the trucks start to roll.
NAFTA’s economic potential has fallen short because of US political interests. That was the case during the pro-free trade administrations of Bill Clinton and George W. Bush. There is little reason to think that President Obama, who campaigned on renegotiating parts of NAFTA, will become a champion of NAFTA writ.
