Thread: LONG-HAUL TRUCKING A CONTINUED BLIND SPOT IN NAFTA VISION

LONG-HAUL TRUCKING A CONTINUED BLIND SPOT IN NAFTA VISION

Supporters say opening border to trucking an important regional step

By Sandra Dibble5:06 A.M.MAY 11, 2014

To deliver doorknobs assembled in Ensenada to Kansas City, Alfonso Esquer needs three trucks. One to carry the knobs to Tijuana. A second to ferry them across the border at Otay Mesa. And a third for the final leg of the trip, from San Diego to the U.S. distribution center.

More than 20 years after the launching of the North American Free Trade Agreement, the treaty’s vision of direct deliveries between the United States and Mexico remains unfulfilled. Even as trade between the two countries has reached record levels — $506 billion in goods crossed the border in both directions last year — truck cargos often must be transferred twice before they reach their destination.

“We saw an opportunity to expand, right as NAFTA came in,” said Esquer, a member of the second generation of a Baja California trucking family, with operations on both sides of the border. But soon, he said, “we saw that with NAFTA we wouldn’t be able to do it.”

NAFTA champions in both countries see the opening of the U.S.-Mexico border to long-haul trucking as an important step in creating a globally competitive North American region.

“Strategically, it’s crucial for North America, if we’re going to become the most competitive region in the world,” said Luis de la Calle, a Mexican economist who served on the NAFTA negotiating team. “We have the best demographics, energy and a deep degree of economic integration,” he said. “The key is good logistics.”

While long-haul trucking on the Canadian border has flowed for years, this has not happened with Mexico.
Two decades after NAFTA, few Mexican trucking companies have seen the opening of the border as an opportunity. A U.S. government pilot program aimed at testing the safety of Mexican trucks on U.S. roads has generated scant participation: Only 13 Mexican trucking companies have operating authority under the three-year demonstration project that ends in October.

“There’s been a good disposition on the part of the Department of Transportation, but it’s been very laborious,” said Arturo Pérez, director of Tijuana-based Grupo Behr, which has one truck in the pilot program. “They want to know, where is the driver, where is the truck. You get notifications from DOT all the time. The fact that you are in the program subjects you to extra inspections.”

Mexican truckers say that political uncertainty over the future of cross-border trucking makes them reluctant to invest in expensive equipment able to pass rigorous U.S. inspections, only to see them later barred from direct U.S. deliveries.

Another impediment often cited is a rule that prohibits Canadian and Mexican-based carriers from carrying goods between U.S. destinations.

“NAFTA in my eyes has the handicap that it’s only international loads,” Esquer said. The risk for a Mexican truck carrying cargo to the United States is that it risks coming back empty, he said. “The business does not move like that,” Esquer said. “Why move a truck if you’re not going to be making money?”

His family’s Mexican-based trucking company, Fletes Esquer, found its own way around the problem: In 1997, it created a U.S. company, U.S. Esquer Multimodal, whose trucks deliver Mexican imports to destinations across the United States — and as far as Canada — and are also able to conduct domestic U.S. deliveries.

But the biggest and most persistent impediment to opening the border for long-haul truckers, many say, is inadequate infrastructure at U.S. commercial ports of entry.

“It doesn’t make sense to put your brand-new $200,000 Volvo tractor to sit idling in line for three hours,” said Martin Rojas, vice president for security and operations at the American Trucking Associations, an early supporter of NAFTA’s trucking provision. “The reality is that these are business people, and they have to make a cost-effective system.”

The border’s inefficiencies have created their own opportunities: A large fleet of short-haul truckers, known as drayage operators or burreros, has emerged to carry goods within commercial zones in both countries. Using older trucks that typically cross several times a day, they provide a critical link for cross-border trade.

“It’s much more economical to have an old worn-down truck if you’re going to have to wait in line for two hours,” said Chris Wilson, a senior associate at the Mexico Institute of the Wilson Center in Washington, D.C.

Since the treaty’s inception, the trucking provision has been the subject of controversy. The U.S. Teamsters union and other U.S. opponents of the measure say allowing Mexican truckers on U.S. roads creates a safety hazard and threatens U.S. jobs. But in Mexico, reluctance on the part of the United States to open the border to Mexican long-haul trucks has led to protests that the U.S. is not fulfilling its NAFTA treaty obligations.

“It’s been an ongoing source of diplomatic tension between the two countries,” said Erik Lee, executive director of the North American Research Partnership.

“There are trade disputes that pop up, are negotiated and fade into memory, but NAFTA trucking has been there as a constant.”

Luis de la Calle, the Mexican NAFTA negotiator, said “the U.S. has to comply with its trade obligation. The U.S. always says, ‘rule of law.’ Let’s have a little rule of law.”

De la Calle recalled that the day in December 1995 when the border was to open to Mexican truckers, “we got a call from (U.S. Trade Representative) Mickey Kantor saying the U.S. was backing down under pressure from the Teamsters.”

Mexico eventually complained, and in 2001, a NAFTA arbitration panel ruled that the United States had failed to live up to its treaty obligations.

In 2007, the U.S. launched an initial trucking pilot program, but it was suspended when Congress cut off financing. In 2009, Mexico retaliated with $2.4 billion in tariffs on 89 manufactured and agricultural export goods. With the inception of the second pilot program, in 2011, the tariffs were lifted.

But now low participation could threaten the validity of the results of this second program, according to an August 2012 report by the U.S. Department of Transportation’s Office of the Inspector General.
To be statistically valid, the report states, the Federal Motor Carrier Administration estimated that at least 46 carriers must participate and 4,100 inspections must be completed. The latter threshold has been met, but two carriers represent the overwhelming majority of crossings and inspections, and that has been drawing fire from NAFTA critics.

“We’re arguing that they are far short of the participating numbers that they need to draw any conclusions,” said Fred McLuckie, director of the Teamsters’ department of federal legislation and regulation. “You’re looking at 13 carriers, that’s not representative of the Mexican trucking industry.”
One solution envisioned by Mexico’s largest trucking trade group, CANACAR, is the creation of border “transfer zones” that would have less stringent U.S. regulations than for trucks traveling farther inland.

But if the U.S. doesn’t accede, CANACAR is preparing to reinstate a 2009 complaint before a NAFTA panel that the United States has breached its treaty obligation, said Executive Director José Refugio Muñoz.

“What really harms us is the uncertainty,” Muñoz said. “We see that Congress will continue to block the U.S. administration from opening to the border as agreed to in NAFTA”

http://www.utsandiego.com/news/2014/...blind-spot-in/