Friday, August 7, 2009

US Position on Mexican Trucks Is Officially an Embarassment

The United States' refusal to let cargo trucks from Mexico travel on US roads has just gone from "really bad" to "plain embarrassing." Allow me to explain (whilest also promoting some of my recent work, of course).

First the backstory. In a blatant attempt to appease angry Teamsters, Congress back in March inserted a provision into the 2009 Omnibus Appropriations Act which killed a program allowing Mexican truck drivers to deliver goods inside the United States. Cato's Dan Griswold explains here:

A provision in the original North American Free Trade Agreement of 1994 was supposed to allow U.S. and Mexican trucking companies to deliver goods in each other’s country. But opposition from the Teamsters union and old-fashioned prejudice against Mexicans has derailed implementation of the provision.

Under current restrictions, goods coming into the United States from Mexico by truck must be unloaded inside the “commercial zone” within 20 miles or so of either side of the border and transferred to U.S.-owned trucks for final delivery. U.S. goods going to Mexico face the same inefficient and unnecessary restrictions.

In response to adverse NAFTA panel rulings against the United States' blatant violation of the agreement, President Bush started a "pilot program" to allow a small number of Mexican trucks, under close supervision, to deliver goods to their US customers. (Everyone else was still out of luck.) The Mexican government went along with this "deal," hoping that the results of that supervision would eventually lead to complete liberalization as intended by the binding trade agreement that they signed over a decade prior. Well, study after study proved that the Mexican trucks were actually safer and cleaner than the American trucks. Go figure.

Yet in 2009 Congress de-funded the program. Of course they did. At the time of the Omnibus Bill's passage, President Obama promised quick resolution of the issue. Yet it's been five months, and nothing. Nada. Here's what Dan Ikenson and I recently wrote in the LA Times about the Mexican response:
[W]hen Congress defunded a program that enabled Mexican trucks to operate on our roads -- placing the U.S. in violation of the North American Free Trade Agreement, Obama offered assurances of a quick resolution. Five months later, there is no fix in sight. To hasten a resolution, the Mexican government imposed $2.4 billion in retaliatory duties on about 90 U.S. exports, and a Mexican trucking association filed a $6-billion lawsuit against the U.S. government.

The reduction in cross-border trade and investment cannot be the economic elixir the president had in mind, nor is the dispute his preferred launching point for diplomatic relations with Mexico. Yet the administration is content, after five months, to just study the problem. How much study is needed to conclude that blatant violation of our NAFTA obligations, plus potentially $8.4 billion in direct costs, plus higher transportation costs on the entire North American supply chain for the benefit of the Teamsters, is a bad idea?
That's pretty bad. But news yesterday from the CQ (subscription required) turns "bad" into "flat-out embarrassing":
Several former government officials wrote President Obama Thursday urging him to allow Mexican trucks on U.S. roads as required by the North American Free Trade Agreement.

The letter, signed by former U.S. Trade Representative Carla A. Hills, former Commerce secretaries Norman Mineta and Carlos Gutierrez, and James Jones, Tony Garza and Jeffrey Davidow, former U.S. ambassadors to Mexico, was sent in advance of Obama’s trip to Guadalajara, Mexico, for an economic summit this weekend.


“The United States unequivocally promised in the [agreement] to let Mexican and U.S. trucks deliver international goods throughout each other’s countries, eliminating the needless cargo transfers now required,” the former officials’ letter says. “Implementing this commitment now will save our businesses and consumers hundreds of millions of dollars a year, and help make North American goods more competitive.”

Transportation Secretary Ray LaHood said in May that access could be resumed as early as June, but since then there’s been no movement from the White House.

A spokesman for LaHood would only say: “We continue to work to find a solution that addresses the concerns of Congress and is consistent with our international obligations.” ...
Keep in mind that Mineta, Jones, and Davidow were Clinton appointees, and Davidow is one of only three people to ever earn the title of "Career Diplomat," the highest ranking diplomatic position in the United States. Also keep in mind that, in case it wasn't already blatantly obvious, all of these folks have first-hand knowledge of the United States' international obligations and the issue at hand. And they're all chastising the Obama Administration and Congress for its stance on the Mexican trucking issue.


So to recap: here we have an indefensible violation of NAFTA that is costing American exporters and consumers hundreds of millions of dollars, soiling relations with a close ally, and earning public criticism from prominent Republicans and Democrats with an intimate knowledge of the issue.

And apparently due to Congressional resistance (and Teamster pressure), the administration's response has been the following: [click here].

Like I said, embarrassing.

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