Trade rep: cross-border program with Mexico would end tariff dispute

| 7/31/2009

If the U.S. is looking for an easy quick fix to the tariff dispute with Mexico, it may mean launching yet another cross-border trucking program, according to the U.S. Trade Representative.

U.S. Trade Representative Ronald Kirk delivered that message July 1 in a letter to Rep. Brad Sherman, D-CA, who is the chair of the House Foreign Affairs Subcommittee.

The letter was in response to Sherman’s urge for action by the Trade Representative Office on the tariffs Mexico slapped on $2.3 billion worth of U.S. goods because the cross-border program had been shut down.

Sherman questioned the Trade Office on whether the tariffs themselves were legal under NAFTA – since in Sherman’s assessment the revenue generated from the tariffs far exceeded the financial impact to Mexico in shutting down the cross-border program.

Kirk, in his response, did not answer whether the $427 million in tariff revenue was legal under NAFTA per se, but rather said the easiest way to end the tariff dispute was to kick off another program.

“I believe that working with Mexico and Congress to implement a new trucking program and ensure the continued safety of our roads will provide the quickest and surest way to end Mexico’s trade retaliation against U.S. exports,” Kirk wrote.

He does, however, acknowledge that his department is “examining” whether Mexico’s retaliation is greater than allowed.

He went on to caution Sherman that if the Trade Representative’s Office were successful in challenging the tariffs, the only success would be in reducing the tariffs and not eliminating them.

“To that end, we believe pursuing with Mexico a new cross-border trucking program – one that in no way compromises the high safety standards we require for trucks and truck drivers operating in the United States – presents the best hope for quick restoration of our free access to Mexico’s market for high-quality, competitive U.S. products,” Kirk wrote.

The Owner-Operator Independent Drivers Association has long opposed opening the border with any program in place that jeopardizes highway safety in the U.S.

That is a point that was reinforced by a NAFTA tribunal decision in 2001 – the same decision on which Mexico is currently hanging its ability to levy tariffs.

As far as the tribunal decision goes, it essentially gave the U.S. more latitude in structuring any sort of cross-border program with Mexico.

“Even though a NAFTA Arbitral Panel decided in 2001 that the U.S. was in violation of NAFTA for failing to process the applications of motor carriers to operate within the United States, it affirmed the right of the U.S. to ‘set the level of protection that they consider appropriate in pursuit of legitimate regulatory objectives,’ including the ‘safety of trucking services,’ ” OOIDA President and CEO Jim Johnston pointed out in a letter to President Barack Obama.

OOIDA remains strong on its position that the safety of U.S. highway users cannot be sold or compromised by throwing a program together to appease Mexico.

Johnston also stressed in his letter to Obama that the U.S. is not under any sort of obligation to lower safety standards or regulatory compliance for Mexican trucks.

Johnston wrote in the letter that NAFTA gives the U.S. “the right to ‘adopt, maintain or apply any standards-related measure, including any such measure relating to safety, the protection of human, animal or plant life or health, the environment or consumers, and any measure to ensure its enforcement or implementation’ provided that such measures must be applied in a non-discriminatory manner.”

“Whether or not Mexico-domiciled trucks and drivers can meet our standards is the Mexican government’s responsibility, just as it would be our responsibility to comply with any reasonable safety and environmental regulation Mexico may impose,” Johnston wrote.

– By Jami Jones, senior editor