Producer Groups Push to Open Mexican Border to Trucking

This story appears in the Feb. 22 print edition of Transport Topics.

Trade groups representing products ranging from farm to factory are pressuring the Obama administration and Congress to reinstate a Mexican cross-border trucking program to end Mexico’s retaliatory tariffs that cost U.S. businesses millions of dollars in lost revenue.

“The only way to solve the tariff issue is to solve the trucking problem,” said a representative of the hard-hit potato industry. “They are absolutely directly linked.”

There is little optimism, however, that the Mexican government will drop tariffs on 89 U.S. products when Mexican trade officials review the list. In fact, some U.S. producers said they fear the list may be expanded.

The tariffs were levied a year ago in March in retaliation after the Obama administration shut down a cross-border pilot program allowing Mexican trucks to travel to the U.S. interior.

The products hit by the 10% to 45% Mexican tariffs range from grapes, cherries, Christmas trees and potatoes to toilet paper, toothpaste, sunglasses and notebooks.

Earlier this month, U.S. Trade Representative Ron Kirk said the trade dispute between the United States and Mexico must be resolved soon and that he urged Congress to find a way to allow Mexican trucks to enter the United States beyond the currently permitted 25-mile border trade zone.

“President Obama made it plain that he would like to see this issue over the ability of Mexican trucks to move freely throughout the United States resolved as soon and as thoughtfully as possible,” Kirk said at a joint Mexico City news conference with Mexico’s Secretary of Economy Gerardo Ruiz Mateos.

Kirk said Obama has asked him to work with Transportation Secretary Ray LaHood and Commerce Secretary Gary Locke “to begin a dialogue with Congress” to come up with a “sensible program.”

Although Mexican trade officials have publicly threatened to keep the tariffs in place, Ruiz Mateos said he believes the two nations will find a solution sometime this year.

A spokeswoman for the U.S. Department of Transportation said the agency has “not yet floated any proposals with Mexico” but “looks forward to consulting with members of Congress.”

The Bush administration implemented the controversial cross-border trucking “demonstration” program in 2007, but Obama ended it in March 2009 after Congress blocked funding for the pilot project.

Kirk said that the Obama administration already has made progress by convincing Congress to remove certain “offending language” from the 2010 appropriations bill that again would have blocked funds from being spent on any cross-border trucking program.

The new language in the bill “does not impede in any way moving forward” with a new cross-border program, said Martin Rojas, executive director of safety, security and operations for American Trucking Associations.

“But we haven’t heard or seen anything from the administration as to what it is that they’re planning on doing,” Rojas said.

Meanwhile, the tariffs are hurting an array of U.S. businesses that send their goods to Mexico.

For example, in the first 10 months under the tariffs, the U.S. potato industry lost $34 million — more than half of its annual $60 million business with Mexico, said John Keeling, chief executive officer of the National Potato Council.

Potatoes — mostly frozen french fries — sent to Mexico by U.S. producers face 20% tariffs, Keeling said. The tariffs have shifted a large segment of potato production and distribution to Canada, Keeling told Transport Topics.

“This just can’t continue,” Keeling said. “Another year of this and we’ll be gone.”

Keeling said that jobs in the trucking industry hauling potatoes also are being turned over to Canadian truckers.

“In a time when we’re spending billions and billions of dollars to save U.S. jobs and stimulate the economy, it doesn’t make much sense that we would, at the same time, allow a trade dispute like this to negatively impact U.S. jobs,” Keeling said.

Even groups such as the National Pork Producers Council, although not subject to the current list of tariffs, are concerned that they could be next, said Dave Warner, a spokesman for the group.

“We were not on the list last year, but we have continued to be a leader in urging the administration to petition Congress to resolve this issue,” Warner said.

He said that a letter asking administration officials to resolve the conflict, written by Rep. Dennis Cardoza (D-Calif.), and Rep. Rick Larsen (D-Wash.), is circulating in the House for additional signatures.

Despite the heightened interest in the issue, Mexican motor carriers that do business with Con-way Truckload say they have no interest in operating in the United States, many because of concerns that they would need to carry large liability insurance and comply with tough U.S. regulations, said Pete Montaño, a Con-way vice president of sales and 28-year-veteran of the Mexican market.

“We deal with 80-plus mostly large Mexican carriers up and down the border, and most of them don’t have an interest in operating in the U.S.,” Montaño said. “You’d be very hard-pressed to find a carrier that is pushing to come to the U.S. and, vice-versa, a U.S. company that is pushing to go into Mexico.”

“It’s more of a political bargaining chip,” Montaño said. “It’s not anything that the carrier community is wanting.”