MARCH 3, 2011, 2:44 P.M. ET.U.S.,

U.S., Mexico Reach Deal to End Trucking Dispute

By ELIZABETH WILLIAMSON

WASHINGTON—President Barack Obama and Mexican President Felipe Calderon unveiled a deal resolving a longstanding dispute over cross-border trucking that has subjected the U.S. to billions of dollars in punitive tariffs.

The plan, announced at a news conference by the two presidents, will allow for half of those tariffs to be lifted immediately. It will establish a reciprocal, phased-in pilot program that allows Mexican trucks to operate inside the U.S. provided they comply with a series of safety and driver-skills and language tests monitored by the U.S. Department of Transportation.

The U.S. had effectively banned Mexican trucks from crossing the U.S. border, after the Teamsters union and others said the trucks weren't safe.

The ban was ruled a violation of the North American Free Trade Agreement, and subjected the U.S. to punitive tariffs by Mexico on a range of goods, from foods to Christmas trees.

The deal to end the dispute "is built on the highest safety standards that will authorize both Mexican and U.S. long-haul carriers to engage in cross-border operations under NAFTA," a senior administration official said.

Mexico would lift 50% of the tariffs when the final agreement for a new program is signed by both nations. The remaining 50% would be lifted when the first Mexican carrier receives authorization under the new program. The U.S. Trade Representative's office would ensure the tariffs are lifted as agreed.

Relations between Mexico and the U.S. have been rocky amid recent violence in Mexico's war on drugs. ICE agent Jaime Zapata was killed and another wounded by gunmen a few weeks ago. It marks the first time a U.S.-law-enforcement official was killed in the line of duty in Mexico in several decades.

Mr. Calderon has said the U.S. needs to do more to help Mexico win its war on drugs. Among the things he has said he wants the U.S. to do is tighten gun laws and work to lower drug use in America.

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Ultimately the agreement to end the dispute would suspend $2.4 billion in annual punitive tariffs on the U.S. It was billed by the White House as a job creator for both nations.

The Transportation Department hopes to have a proposed agreement available for congressional briefings and public notice and comment by late March or early April. After responding to public comments, the U.S. would finalize the agreement with Mexico.

"This is a very positive development, but it is not a done deal," an administration official said, adding some details are still being negotiated.

The dispute has simmered for more than 20 years, fanned by labor unions and their allies in Congress who secured repeated bans on Mexican trucks in the U.S. The disagreement has forced goods headed from Mexico into the U.S. to be re-loaded into U.S. trucks at the border.

Under the agreement, trucks will be required to have electronic on-board recorders to track compliance with U.S. hours-of-service laws.

Mexican trucks would further be required to comply with all U.S. motor-safety standards, and drivers would have to undergo testing for knowledge of English and U.S. safety laws and would be screened for illegal drug use.

Write to Elizabeth Williamson at elizabeth.williamson@wsj.com

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