Too Few Mexican Fleets in Pilot Program, FMCSA Official Says; Warns of Tariffs

ALEXANDRIA, Va. — Low participation by Mexican carriers in the cross-border trucking program could lead to the resumption of Mexican tariffs on U.S. goods, an official with the Federal Motor Carrier Safety Administration said.

Without more carriers participating, FMCSA would not be able to collect the safety data it needs to judge Mexican carriers’ safety, said Bill Quade, the agency’s associate administrator.

The result would be the failure of the program, which would mean U.S. officials could not permanently allow Mexican carriers into the country. That could open the door for Mexico to impose new tariffs on goods imported from the United States.

“The agency is extremely concerned about not having sufficient data,” Quade told a subcommittee of the Motor Carrier Safety Advisory Committee.

MCSAC, which includes representatives of industry, labor and law enforcement groups, is FMCSA’s main advisory board. The subcommittee with responsibility for the Mexico program heard from Quade here on May 23.

Quade said that without sufficient data, “we cannot normalize relations with Mexico and start accepting applications for authority.”

He added the result is likely “Mexico putting tariffs back on United States goods.”

The Department of Transportation’s spokesman said that the agency is confident the program will be successful.

“The cross-border trucking agreement we signed with Mexico last year ended crippling tariffs on American farmers, and we are fully confident that over the next 2½ years, we will gather the data needed to make the program permanent,” said Justin Nisly, press secretary for Transportation Secretary Ray LaHood.

When FMCSA developed the pilot program, it said it would need about 43 Mexican carriers to make 4,100 crossings during the three-year program.

As of May 8, only three carriers were in the program, and they had crossed 33 times, he said.

Each carrier has had one truck and one driver approved for the program, which was developed to comply with the North American Free Trade Agreement.

The United States had been in violation of the agreement since it ended the previous pilot program in 2009, so Mexico had put $2.4 billion in annual retaliatory tariffs on U.S. goods. The tariffs stopped when the new program began (10-24, p. 7).

Mexico would be likely to issue new tariffs if the United States does not allow Mexican trucks into the country following the pilot, Quade said. But the pilot program will not end until 2014, and Quade said there is still hope that there will be enough crossings by then.

“Once we get a few carriers in and other Mexican carriers see that there are Mexican carriers operating in the United States . . . there might be more interest in the future,” he said.

DOT and FMCSA are working with Mexican government and industry officials to encourage more carriers to apply for the program, Nisly said.

Two weeks before Quade’s presentation, three carriers’ safety audits were posted for public comment (5-21, p. 4).

Thirty carriers had applied as of May 23, including the carriers that already had been approved and those that had completed audits, Quade said. Four carriers had their applications rejected, four voluntarily rescinded them and the rest were in the application process or approved, he said.

John Lannen, a committee member who serves as executive director of the Truck Safety Coalition, asked if FMCSA knew why participation was so low.

Quade said some carriers participated in the previous pilot, only to have the program canceled with a few hours’ notice, so they do not trust that the current program won’t suddenly end.

One carrier, whom Quade did not identify, withdrew its application after its officials saw that its insurance costs would increase drastically if it participated. Another withdrew an application upon finding that it did not own a truck that complied with U.S. environmental standards.

“So there’s a difference between having an interest and the real, live impact of operating in the United States under a regime that’s going to ensure compliance,” Quade said.

Members of the MCSAC subcommittee criticized FMCSA’s oversight of the program, specifically targeting the agency’s recent decision to allow two carriers’ applications to proceed, even though they did not disclose affiliations with other trucking companies.

In announcing their safety audits earlier this month, FMCSA said that both Higienicos y Desechables del Bajio and Servicios Refrigerados Internacionales did not disclose that they are affiliated with U.S.-based carriers. The agency determined that the omissions were not of concern.

“Where’s the analysis that you did to make this determination?” asked Henry Jasny, a committee member who is general counsel for Advocates for Highway and Auto Safety.

“We noted it in the Federal Register,” Quade responded. “We did not go into an in-depth discussion of our analysis of that.”

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said that he found it “curious” that the carriers omitted those details.

Jasny asked that FMCSA be more transparent about its process in determining whether such omissions should be overlooked.