Mexico Seeks Nafta Damages
Truckers Say U.S. Violations Cost Billions Yearly
By Sean McNally, Senior Reporter
This story appears in the May 12 print edition of Transport Topics.
Mexico’s principal trucking group said its members have lost more than $2 billion a year because the United States has refused to allow cross-border trucking as required by the 1993 North American Free Trade Agreement and that it is seeking damages through arbitration.
The action by Camara Nacional del Autotransporte de Carga, or Canacar, is the latest development in the long dispute over allowing Mexican trucks to deliver freight to destinations within the United States.
Canacar said the United States violated NAFTA by “refusing entry of [Mexican trucks] into the United States for provision of trucking services and by prohibiting [them] from investing in United States enterprises that provide such services.”
In 2000, Mexico won a NAFTA arbitration panel decision that said the U.S. refusal to allow Mexican trucks to deliver north of the border violated the treaty, which was signed by the United States, Mexico and Canada (12-4-2000, p. 1).
In 2001, President Bush said he would open the border, but Congress enacted a series of requirements for truck and fleet inspections, and several lawsuits have blocked attempts by the Department of Transportation to allow Mexican truck deliveries. Last year, DOT began a pilot program to open the border on a limited basis.
The value of goods moved by truck between the two nations has grown nearly 50% since Bush moved to open the border. Last year, trucks carried some $230 billion in freight between the nations.
In an April 2 letter to the State Department, Canacar said it would “submit a claim to arbitration” under NAFTA, which allows private groups and governments to seek damages.
“The government of Mexico has estimated that the United States’ breaches cost Mexico more than $2 billion a year,” Canacar said. “We believe that the majority of that damage has been inflicted directly” on Canacar members.
Canacar’s letter does not specify how many years’ worth of damage it would seek. If damages were to start from the last arbitration ruling, the bill could come to nearly $14 billion.
“They would essentially have to cut a check” to Canacar if the group prevails, said Mark Maney, a Houston attorney representing the group.
Maney said Canacar is “essentially a chamber of commerce that was created by the Mexican government and has the right to represent the entire industry and we have, based on that power, initiated this NAFTA arbitration challenging the U.S.’s failure to abide by NAFTA.”
In comments on the administration’s pilot program, DOT Secretary Mary Peters has often said the United States could face up to $2 billion annually in NAFTA penalties (3-17, p. 32).
The damages are the result of “increasing border congestion . . . preventing the exploitation of opportunities for delivering loads further into the United States [and] costs associated with new capital investments to comply with United States laws,” Canacar said.
The $2 billion annual estimate is a combination of the costs of denied border crossings, lost profits, wasted capital investments and other associated costs.
Canacar estimated the border closure “costs Mexican trucking companies approximately $100 per crossing” and with the number of crossings, “the claimants have been damaged more than $1.35 billion over the last three years.”
Also, Canacar said the Mexican trucking industry suffered “more than $1 billion” in lost profits and had to spend “tens of millions of dollars” to comply with U.S. safety and environmental standards, with no financial return.
“We also note that current regulations have the perverse effect of encouraging the use of older trucks for drayage across the border, exacerbating the pollution and safety issues used by the United States as its excuse to avoid its NAFTA obligations,” the Mexican group said.
Freight crossing the border now is generally carried by longhaul trucks to the border, and then crosses into the United States in older drayage vehicles that stay within a narrow commercial zone.
State Department attorney Heather Walsh said the United States was “reviewing” Canacar’s claim and was preparing to meet with the group.
Maney said the arbitration process usually takes less than 18 months.
The head of DOT’s Federal Motor Carrier Safety Administration said the United States was trying to meet its NAFTA commitment with the pilot program.
“We believe we are in the process of fulfilling our NAFTA obligation by having this demonstration program, and we encourage Canacar to participate and their members,” FMCSA Administrator John Hill told TT.
However, Maney said Canacar viewed the pilot program, which is the subject of unresolved litigation in the United States, as “way too little too late.”
“That is a very limited program that has no real effect,” Canacar Operating Director Oscar Moreno told TT. “We want the full NAFTA program implemented.”
A spokeswoman for the Teamsters union, which has been a very active opponent of opening the border, said the main issue is highway safety.
“The NAFTA tribunal has said that we can impose different admission procedures on trucks from Mexico if safety is a concern, and safety is our concern, and safety was Congress’ concern,” said Leslie Miller. “The Mexican government has not kept its part of the bargain to raise standards to the point where a truck from Mexico is going to have the same level of safety as a truck from the United States.”
Staff Reporter Frederick Kiel contributed to this report.
This story appears in the May 12 print edition of Transport Topics.
Mexico’s principal trucking group said its members have lost more than $2 billion a year because the United States has refused to allow cross-border trucking as required by the 1993 North American Free Trade Agreement and that it is seeking damages through arbitration.
The action by Camara Nacional del Autotransporte de Carga, or Canacar, is the latest development in the long dispute over allowing Mexican trucks to deliver freight to destinations within the United States.
Canacar said the United States violated NAFTA by “refusing entry of [Mexican trucks] into the United States for provision of trucking services and by prohibiting [them] from investing in United States enterprises that provide such services.”
In 2000, Mexico won a NAFTA arbitration panel decision that said the U.S. refusal to allow Mexican trucks to deliver north of the border violated the treaty, which was signed by the United States, Mexico and Canada (12-4-2000, p. 1).
In 2001, President Bush said he would open the border, but Congress enacted a series of requirements for truck and fleet inspections, and several lawsuits have blocked attempts by the Department of Transportation to allow Mexican truck deliveries. Last year, DOT began a pilot program to open the border on a limited basis.
The value of goods moved by truck between the two nations has grown nearly 50% since Bush moved to open the border. Last year, trucks carried some $230 billion in freight between the nations.
In an April 2 letter to the State Department, Canacar said it would “submit a claim to arbitration” under NAFTA, which allows private groups and governments to seek damages.
“The government of Mexico has estimated that the United States’ breaches cost Mexico more than $2 billion a year,” Canacar said. “We believe that the majority of that damage has been inflicted directly” on Canacar members.
Canacar’s letter does not specify how many years’ worth of damage it would seek. If damages were to start from the last arbitration ruling, the bill could come to nearly $14 billion.
“They would essentially have to cut a check” to Canacar if the group prevails, said Mark Maney, a Houston attorney representing the group.
Maney said Canacar is “essentially a chamber of commerce that was created by the Mexican government and has the right to represent the entire industry and we have, based on that power, initiated this NAFTA arbitration challenging the U.S.’s failure to abide by NAFTA.”
In comments on the administration’s pilot program, DOT Secretary Mary Peters has often said the United States could face up to $2 billion annually in NAFTA penalties (3-17, p. 32).
The damages are the result of “increasing border congestion . . . preventing the exploitation of opportunities for delivering loads further into the United States [and] costs associated with new capital investments to comply with United States laws,” Canacar said.
The $2 billion annual estimate is a combination of the costs of denied border crossings, lost profits, wasted capital investments and other associated costs.
Canacar estimated the border closure “costs Mexican trucking companies approximately $100 per crossing” and with the number of crossings, “the claimants have been damaged more than $1.35 billion over the last three years.”
Also, Canacar said the Mexican trucking industry suffered “more than $1 billion” in lost profits and had to spend “tens of millions of dollars” to comply with U.S. safety and environmental standards, with no financial return.
“We also note that current regulations have the perverse effect of encouraging the use of older trucks for drayage across the border, exacerbating the pollution and safety issues used by the United States as its excuse to avoid its NAFTA obligations,” the Mexican group said.
Freight crossing the border now is generally carried by longhaul trucks to the border, and then crosses into the United States in older drayage vehicles that stay within a narrow commercial zone.
State Department attorney Heather Walsh said the United States was “reviewing” Canacar’s claim and was preparing to meet with the group.
Maney said the arbitration process usually takes less than 18 months.
The head of DOT’s Federal Motor Carrier Safety Administration said the United States was trying to meet its NAFTA commitment with the pilot program.
“We believe we are in the process of fulfilling our NAFTA obligation by having this demonstration program, and we encourage Canacar to participate and their members,” FMCSA Administrator John Hill told TT.
However, Maney said Canacar viewed the pilot program, which is the subject of unresolved litigation in the United States, as “way too little too late.”
“That is a very limited program that has no real effect,” Canacar Operating Director Oscar Moreno told TT. “We want the full NAFTA program implemented.”
A spokeswoman for the Teamsters union, which has been a very active opponent of opening the border, said the main issue is highway safety.
“The NAFTA tribunal has said that we can impose different admission procedures on trucks from Mexico if safety is a concern, and safety is our concern, and safety was Congress’ concern,” said Leslie Miller. “The Mexican government has not kept its part of the bargain to raise standards to the point where a truck from Mexico is going to have the same level of safety as a truck from the United States.”
Staff Reporter Frederick Kiel contributed to this report.
