Mexico Needs Open Trucking

Deregulation of the Mexican trucking industry over the last 10 years has lowered freight rates and expanded volume. But the nation’s improving international competitiveness will depend in part on the United States’ willingness to open the border with its southern neighbor, according to a report released by a Paris-based think tank.

In the preliminary edition of its study, “Regulatory Reform in Mexico,” the Organization for Economic Cooperation and Development found that from 1989 to 1996, the number of registered trucks in Mexico increased 92%, while between 1987 and 1994 trucking rates declined 23%. Since 1989, traffic volumes has risen 8.6% a year.

“The OECD review of Mexico is, overall, quite good,” said Joanna R. Shelton, deputy secretary-general of the coalition. “The Mexican government has already made substantial progress on regulatory reform and is on track to converging with international good practices in many areas.”

The OECD attributed these improvements to:

• The integration of “informal” trucking companies — the “transportistas piratas,” which typically evaded law enforcement and paid no taxes.
• The elimination of trucking cartels that fixed prices, offered poor service and hampered competition.
• The end of entry restrictions.

Competition would be significantly strengthened, the report noted, if the U.S. government fully opened its border with Mexico. The North American Free Trade Agreement called for the border to be opened to international trucking Dec. 18, 1995. But in light of safety and border security concerns, the move was frozen and remains so, despite lobbying from American Trucking Associations and the Mexican government.

The International Brotherhood of Teamsters and safety watchdog groups have argued that opening the border now would be premature because there is inadequate border enforcement and because Mexican safety and environmental standards are lower than in the United States.

Despite an upbeat report card on Mexican deregulation, the report’s authors concede much work still needs to be done. The breakdown of regulatory responsibility between federal and local authorities needs clarification, for example.

The report, released Aug. 4, also stressed the need for enforceable environmental regulations and consistent size-and-weight rules.

The OECD, made up of 29 member organizations, is a research group dedicated to developing world economic and social policy.