Study Sees $4.8 Bln. Cost from Mexican Truck Ban

This story appears in the Sept. 28 print edition of Transport Topics.

The United States’ failure to open its borders to Mexican trucks has cost the country roughly $4.8 billion, according to a new report by the U.S. Chamber of Commerce.

The study said the costs were tariffs Mexico placed on some U.S. goods in retaliation for not complying with the North American Free Trade Agreement, plus the expense to shippers of having to transfer loads from one country’s trucks to the other’s at the border.

Meanwhile, the Obama administration’s work on reopening the border between the two countries continues, the acting head of the Federal Motor Carrier Safety Administration told Transport Topics, but it could be several months before a plan is put together.

The Chamber said its study, which was released Sept. 15, found that “the U.S. failure to implement NAFTA’s cross-border trucking provisions has resulted in $2.2 billion in higher costs for U.S. families and companies, $2.6 billion in lost U.S. exports, and more than 25,000 lost jobs for American workers.”

“There are two costs now associated with the failure by the United States to implement the NAFTA trucking provisions,” the study said, citing the cost of drayage shipping between the United States and Mexico and the tariffs imposed by Mexico.

“Continuation of drayage and Mexican retaliation cause U.S. exports to decline by $2.6 billion, and reduces total U.S. employment by another 0.02%,” the Chamber of Commerce said. “The total impact on U.S. jobs is 25,557,” based on total U.S. full-time equivalent employment in 2008 of 127.8 million.

The business group’s study said that based on DOT estimates for the cost of drayage service and the number of truck crossings made in 2008, trucks’ inability to deliver to destinations across the border, “yields an annual cost estimate of drayage of $739 million.”

That cost, they said, “is passed on to U.S. consumers, ultimately, in the form of higher prices for goods imported from Mexico.”

Earlier this year, Congress shut down a Bush administration test of cross-border trucking, a move that was immediately criticized by business groups and drew retaliation from Mexico in the form of $2.2 billion in tariffs on U.S. goods ranging from frozen potatoes to sunglasses.

In addition, Chamber President Tom Donohue said failure to open up the border for trucking makes it more difficult for the United States to enforce other trade agreements.

“The U.S. has refused to keep its word to Mexico,” Donohue said. “How can we call on other countries to meet their obligations under trade agreements if we refuse to meet our own?”

Those opposed to allowing Mexican trucks to deliver in the United States criticized the Chamber’s study.

“The Chamber gets it exactly wrong on several levels,” Teamsters union President James Hoffa said. “First, it’s NAFTA that cost at least a million U.S. jobs. Second, Mexico imposed tariffs that are manifestly excessive, and that’s a violation of trade rules. It’s outrageous to blame the United States government for Mexico’s disregard for U.S. highway safety standards, as well as trade agreements.”

The union, which has been one of the most vocal opponents of allowing Mexican trucks onto U.S. highways, said that according to the U.S. Department of Transportation, just 118 Mexican trucks participated in the cross-border pilot project, making a little more than 1,400 trips beyond the commercial zone along the border.

“It’s ridiculous for Mexico to claim that 118 trucks accounted for more than $400 million in trade in 18 months, and it’s just wrong for the Chamber to claim that keeping the border closed cost U.S. jobs,” Hoffa said.

Separately, Rose McMurray, acting head of FMCSA, told TT the agency was optimistic about finding a resolution to the on-going trade row between the United States and Mexico over longhaul truck access.

“Hopefully, something will get resolved in the next few months,” McMurray told TT after speaking at the Commercial Vehicle Safety Alliance’s annual meeting in Baltimore on Sept. 21.

Since March, U.S. officials, including President Obama, have said they want to resolve the dispute, and McMurray said FMCSA has “been meeting with White House staff.”

“There is a lot going on with this issue,” she told TT, but added that there are a number of other issues on the domestic agenda the White House is dealing with as well.