Opinion: Nafta Works

By Michael Card

First Vice Chairman

American Trucking Associations

This Opinion piece appears in the Nov. 28 print edition of Transport Topics. Click here to subscribe today.

The slogans on signs held by opponents of the cross-border trucking provisions of the North American Free Trade Agreement have included statements such as “Nafta Kills!”

A common statement attributed to Nafta trucking opponents is that “unsafe Mexican trucks” will be unleashed on American highways.

But the real problem is that the opponents of Nafta trucking, once again, are threatening the tangible progress and the economic growth of our country. Their campaign exaggerations and scare tactics do a great disservice to everyone involved in providing cross-border trucking services.

The recently implemented Nafta pilot program is a three-year test that will allow authorized trucking companies of both countries to transport longhaul freight across the border. Currently, all loads coming from Mexico to points in the United States — aside from the border commercial zones must be transshipped into warehouses and onto other trailers or other transfer arrangements. The same is true for loads from the United States to Mexico. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said that adds to the cost by as much as 5%, depending on the kind of product being shipped.

President George H. W. Bush initially signed Nafta, legally ratified by the U.S. Congress and implemented on Jan. 1, 1994. The reason Nafta was approved was to eliminate barriers to trade and investment between the United States, Canada and Mexico.

However, when the United States unilaterally canceled the 2007 Nafta trucking demonstration project, Mexico levied more than $2 billion in compensatory tariffs on U.S. goods exported to Mexico.

These tariffs hurt not only producers of such goods but also U.S. trucking companies that no longer transported those goods because Mexico could source the same products more cheaply from other countries. The new Nafta trucking pilot program has resulted in Mexico’s eliminating 100% of those tariffs. The “Made in the U.S.A.” products that had been affected by the situation once again are flowing to our second-largest export market — Mexico — primarily by truck.

However, if for some reason the program is not extended at the end of the three-year period, Mexico will reinstate the harmful tariffs.

We shouldn’t let that happen again.

There is little doubt that Nafta has succeeded in growing trade among the three countries, and trucking companies have benefited directly from the increasing trade volumes. According to the U.S. Bureau of Transportation Statistics, in 2010, trucks transported more than $260 billion worth of U.S.-Mexico trade. In 2011, the value is estimated to increase to $300 billion. More important, trucks transport roughly 70% of Nafta surface trade.

With growing Nafta trade volumes, we must improve our cross-border operations with Mexico. Currently, authorized Canadian truckers have free access to come into every part of the United States to haul freight. Cabotage rules prevent them from hauling freight within the United States. They can haul only international freight. The same will be true for Mexican carriers.

The free flow of freight between the United States and Canada definitely has helped both countries, just as the free flow of freight between the United States and Mexico will.

The fact is, Mexican trucking companies already have demonstrated their ability to operate safely in the United States Recent data provided by the Federal Motor Carrier Safety Administration indicate that Mexican trucks are as safe as U.S. trucks and that their drivers are generally safer than U.S. drivers.

Mexican trucks operating in the United States are those operating within the border commercial zone. There are 7,134 Mexican carriers with the authority to operate within the border commercial zone. As a group, the Mexican carriers have a total of 28,533 trucks

Between fiscal years 2004 and 2008, these Mexican trucks had vehicle out-of-service rates that were slightly less than U.S. trucks (about 21% versus 22%) and driver out-of-service rates significantly lower than U.S. drivers (1% versus about 7%).

It is difficult for me to fully understand the opposition to Nafta trucking. Allowing Mexican trucks beyond the commercial zone will not displace U.S. drivers, and Nafta will not help us solve our driver-shortage problem because foreign drivers are prohibited from operating domestically in the United States.

The real effect of this program is improving cross-border operations for longhaul motor carriers instead of depending on “third-party” drayage trucks to transport freight across the border.

So, Nafta doesn’t kill. In fact there is no reason to think cross-

border trucking will do any harm. On the contrary, Nafta, if allowed to work as originally envisioned, will be an economic boon to citizens of both countries as our global competitiveness increases.

It is OK to debate the merits of any program, but using incendiary language to scare the public into thinking this is a safety issue is just wrong. In a time of struggle for our economies, here is a simple way to have a positive and large effect, without the need to raise taxes.

We in the trucking industry should stand up and support Nafta, support the cross-border pilot program and strive to continue to improve all aspects of cross-border operations with two of our largest global trading partners: Mexico and Canada.

It’s the right thing to do.

The author is president of Combined Transport Inc., Central Point, Ore., which provides flatbed and specialized trucking services. American Trucking Associations, Arlington, Va., is a national trade federation for the trucking industry with affiliated associations in every state. ATA owns Transport Topics Publishing Group.