The federal government will soon allow Mexican truckers to operate in the United States, in a deal that would end a nearly 20-year dispute between the bordering nations.
Under the terms of NAFTA, the truckers should have been allowed entry years ago. But that hasn't happened, due to U.S. concerns about the safety of Mexican rigs. Unofficially, pressure from unionized truckers here has also stymied the arrangement. The Bush administration launched a pilot program to give some Mexican truckers access to the U.S., but President Obama did not continue it.
Last week, however, President Obama and Mexican President Felipe Calderón announced that they had set a path toward resolving the dispute. Eventually, truckers from one country will be able to make runs into the other, and as result, retaliatory tariffs Mexico had imposed on some U.S. goods as punishment for reneging on the deal will be repealed.
Half those tariffs will be lifted when a final agreement is signed, and the other half will be repealed when the first Mexican carrier gets authorization to travel in the U.S. Negotiators for both countries are continuing to hammer our the terms of the deal, and a proposed agreement could be ready within a few months.
"This agreement will deliver a program that is safe, secure, efficient and advances the economic interests of both the United States and Mexico," the Obama administration said in a statement.
Mexican truckers would have to receive clearance from the Department of Transportation to deliver goods into the United States.
Currently, when Mexican carriers deliver goods to the U.S., they unload their goods at warehouses and storage centers in communities just north of the border. From there, American truckers pick up goods and distribute them across the nation. Under the new plan, that intermediary step could be removed, which would make trade more efficient.
As a result of the deal, costs for consumers will decrease on both sides of the border. Mexican consumers will save money since they won’t have to pay the retaliatory tariffs on American goods, which will benefit U.S. exporters. And American consumers will save money since shipments north could become faster and thus less expensive.
“This goes back to the idea of more free and efficient commerce, at better prices,” said Nelson Balido, president of the Border Trade Alliance, in an interview with Governing. The organization represents businesses and localities that advocate for policies facilitating U.S.-Mexico trade. “Ultimately, the consumer benefits because the costs go down. Competition is healthy.”
The impact of the program could, however affect American-based trucking jobs. That's because the inefficiency created when Mexican truckers are blocked from continuing their deliveries north creates work for American truckers.
“We simply don't believe U.S. taxpayers should pay to let more Mexican companies depress American workers' wages,” James P. Hoffa, president of the, International Brotherhood of Teamsters, wrote a column published earlier this year in the Detroit News.
Others who could suffer under the deal are developers who create large logistics facilities in U.S. border communities where goods from Mexican trucks are stored and eventually transferred to American big rigs.
But the benefits of the program likely offset the effects to those constituencies, says Marney Cox, chief economist at the San Diego Association of Governments, which represents 18 city and county governments. “It’s hard to say that a kink in the supply chain created by a piece of regulation is good for the market,” Cox told Governing.
The deal will increase the speed at which products manufactured in Mexico can reach their American destinations, reducing costs for consumers. That will make the maquila industry in Mexico more competitive, which in the long-run will have a benefit border communities whose economies are closely tied to that industry. American communities will also benefit from increased exports as a result of cheaper prices for American exports once the tariffs are lifted.
Cox also said that it’s unclear whether the effect on American truckers will be as drastic as the Teamsters have suggested. Since some northbound Mexican trucks carry products intended for distribution across the United States – not just one city – it may make sense for their shipments to be unloaded and distributed by multiple American truckers anyway.