Mexican trucking Archives - Shopfloor

Agreement Signed on Mexican Trucks

By | Trade | 2 Comments

The U.S. and Mexican governments have signed a Memorandum of Understanding (MOU) on a new cross-border trucking program that will bring the United States into compliance with our NAFTA commitments. This is good news – if long overdue – for manufacturers in America.

For over 30 months, U.S. manufacturers have faced billions in retaliatory tariffs on hundreds of products they ship into Mexico as a result of our ban on Mexican trucks. Now with this MOU, those tariffs will be cut in half – and will be suspended completely once the first truck is certified under the new program.

The NAM strongly believes that all countries need to uphold their international obligations, and that includes commitments made by the United States.  We need to press other countries hard to live up to their agreements, but we cannot expect them to comply if we don’t. Resolution of the trucking dispute and removal of retaliatory tariffs is a very positive development.

Doug Goudie is director of international trade policy, National Association of Manufacturers.


Cross-Border Trucking, the Opportunities, the Lawsuits

By | Briefly Legal, General, Trade, Transportation | One Comment

The 30-day comment period ended Friday for the Federal Motor Carrier Safety Administration’s proposed rules to put into effect the long-delayed cross-border Mexican trucking program required under the North American Free Trade Agreement. (Docket: FMCSA-2011-0097).

The Riverside (Calif.) Press-Enterprise offered a thorough report on the issue, albeit with a headline one can argue over, “Cross-border trucking and tariffs — hard to balance.” To exporters of agricultural and manufactured goods, it doesn’t seem that hard at all. The tariffs tilted the scales heavily in a bad direction, and enacting the cross-border trucking program restores the balance.

Much of the effect in California has been on agricultural products, including dates, table grapes, lettuce and other crops grown in eastern Riverside County. Dave Kranz, a spokesman for the California Farm Bureau, said the tariff on table grapes, as high as 45 percent initially, cost growers 70 percent of their Mexican market.

Doug Goudie, director of international trade policy for the National Association of Manufacturers, said adding on that kind of tariff drives away customers and damages American producers. Goudie said he knows of one Mexican firm that is buying potato products grown in Canada, which he said was absurd because the products had to move through the U.S. to get to the destination.

“If you have to add 25 cents to every dollar for everything you’re trying to sell, pretty soon a Chinese or a Canadian product looks a lot better,” Goudie said.

Once the program is place, there will be more economic activity on both sides of the border. Increased opportunity, investment and wealth means trial lawyers will follow with bogus, hyped, shakedown lawsuits. (Where have we seen that before?) The American Association for Justice, the trial lawyer lobby, is setting the stage for litigation with its comments to the FMCSA, described in a news release, “Mexican-Based Trucks Should Carry Adequate Insurance: NAFTA Trucking Provisions Lack Protections for Motorists Injured in Accidents.

The important thing for the U.S. plaintiffs’ lawyers is to get their assertion on record that the insurance requirements are inadequate. Personal injury attorneys can then point to their regulatory submission to broaden the targets of their litigation from Mexican operators/insurers to more deep-pocket U.S. companies.

Solving U.S.-Mexico Trucking Dispute Heralds Export Opportunities

By | General, Trade, Transportation | 2 Comments

Today’s Federal Register contains the Department of Transportation’s proposal for re-opening cross-border trucking with Mexico (Pilot Program on NAFTA Long-Haul Trucking Provisions). Once this plan is finalized, the retaliatory tariffs on $2.5 billion worth of U.S. manufactured goods and agricultural products will be cut in half. Those tariffs will be suspended completely once the first Mexican carrier is certified under the agreement.

This is a very welcome development and one that is overdue. For two years American manufacturers of a wide range of products have been paying 15-25 percent more than our competitors in Mexico, losing market share to manufacturers in China, Brazil, Canada, Japan, and other countries. These tariffs were put in place because the United States would not uphold its commitments made under North American Free Trade Agreement. The agreement published today will rectify this.

The National Association of Manufacturers has led efforts to repeal the ban on cross-border trucking for more than two years. The loss of exports to our second largest trading partner as a result of the tariff retaliation by Mexico forced manufacturers in America to cut production and lay off workers. Some may never recover their market share losses in Mexico.

This trade dispute did not need to happen. We are very pleased to see the end in sight as represented by today’s Federal Register notice. We urge the Obama Administration to sign the agreement after the 30-day comment period and move expeditiously to certify the Mexican carriers, and end the tariff retaliation.

Doug Goudie is director, international trade policy, for the NAM.

Belated U.S.-Mexico Truck Deal Could Lift Tariffs, Boost Exports

By | General, Infrastructure, Trade | No Comments

President Obama and Mexican President Felipe Calderon announced a tentative agreements Thursday under which the United States would finally implement the cross-border trucking program required by U.S. signing of the North American Free Trade Agreement. The announcement is excellent news for U.S. farmers and manufacturerers whose products have suffered from retaliatory tarifs from Mexico.

As the National Association of Manufacturers’ Aric Newhouse said in a statement: “The United States is a global leader in ensuring enforcement of trade laws, and we need to lead by example – by coming into compliance with our NAFTA obligations on Mexican trucks. The NAM has led the effort in urging the Administration to reach an agreement to end these costly tariffs.”

Houston Chronicle and San Antonio Express News, “Deal would lift U.S. roadblock on Mexican trucks,” quotes two Texas business leaders talking about the positive, practical implications of the agreement.

“More than 15 years ago NAFTA was signed declaring free trade and removing obstructions to the flow of goods between Mexico and the United States,” Jeff Moseley, president and CEO of the Greater Houston Partnership, said in a statement. “With the compromise announced today, the full potential of NAFTA can come to fruition and Houston can hopefully grow its annual trade with Mexico currently at $16.2 billion.” …”We are pleased,” said Free Trade Alliance San Antonio president and CEO Kyle Burns. “It is unfortunate that it took billions of dollars in retaliatory tariffs to force the U.S. government into living up to its international obligations.

“We are hopeful that this latest program will lead to the successful conclusion of this issue, which should have been fully implemented in 2000. Mexico is showing good faith in our efforts. It is now up to the United States to follow through on our latest commitments and stop hiding behind safety concerns that are unfounded, as the initial pilot program proved.”

In Seattle, Address the Cross-Border Trucking Dispute

By | Infrastructure, Trade | One Comment

When President Obama speaks in Seattle on exports Tuesday, we hope he’ll shed some light on the continued delays in resolving the Mexican cross-border trucking issue.  After all, he’s raising campaign money that same day for Sen. Patty Murray (D-WA), who has worked to resolve the trade dispute that is notably costing Washington State farmers — and manufacturers across the country — millions of dollars in lost sales.

In March 2009, the Mexican government imposed retaliatory tariffs on selected U.S. agricultural and manufactured goods because the United States (in this case, Congress) had violated NAFTA by blocking enactment of a cross-border trucking program.

Potato and frozen potato products are among those hit hard by the tariffs. As the Northwest-based ag newspaper, The Capital Press, reported last week, “Senate seeks solutions to dispute“:

Tariffs of 20 percent on U.S. frozen potato products have been in effect since March 19, 2009. The tariffs cost the industry more than $33 million in revenue during the 12 months ending in March, officials estimate.

“It’s just phenomenal the amount of revenue that’s been lost,” Matt Harris, director of trade for the Washington State Potato Commission, said in an interview.

Washington is the nation’s largest producer of frozen potato products, historically providing about half of all shipments to Mexico. Nearly 90 percent of the state’s spud crop is used to make products such as frozen french fries and hash browns.

Because of the tariffs, major potato processors have begun sourcing Mexican shipments from Canada rather than U.S. plants, industry officials said.

Sen. Murray had language inserted into the committee report for the FY2011 Transportation and HUD appropriation bill (S. 3644) requiring the Administration to put forward a plan by Oct. 1 to end the dispute and retaliatory tariffs. As she said in a release:

“I am extremely frustrated that the Administration has not yet acted while farmers across my home state of Washington continue to suffer under Mexico’s retaliatory tariffs,” said Senator Patty Murray. “I am urging both the Obama Administration and the Mexican government to solve this issue and allow Washington state farmers to compete on a level playing field. Since there has been inaction for too long, I included specific language in the transportation spending bill giving the Administration a clear deadline of October 1, 2010 to solve this problem.”

Good. Unfortunately, Congress is likely to pass few if any appropriations bills in September, but perhaps Murray’s language will be included in a continuing resolution. In any case, we look forward to hearing the President’s remarks on the issue.

More …

At the White House, Remarks about Cross-Border Trucking Issue

By | Infrastructure, Trade | No Comments

President Obama and President Calderon of Mexico released a joint statement after their meeting today, and they also held a media availability. The most direct reference we find to the cross-border trucking and tariffs issue came in the availability from President Calderon:

Together, we should increase our exporting capacity in a contest of growing competitiveness among different regions of the world.  We talked about the different obstacles that are there for complying with transportation obligations that have been established at NAFTA, a situation that impacts jobs, companies and consumers in Mexico and in the United States.  And we shall work in order to achieve a quick solution with a constructive, creative solution in the long term in this and many other areas. 

The joint statement also had this diplomatic language:

The Presidents agreed that safe, efficient, secure, and compatible transportation is a prerequisite for mutual economic growth.  They committed to continuing their countries’ cooperation in system planning, operational coordination, and technical cooperation in key modes of transportation.

So that’s it.

On Mexico Trucking Dispute, How Close is Soon?

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Mexican President Calderon arrives in Washington on a state visit this week. We expect he will raise an old and a very costly issue – the refusal of the United States to adhere to its obligations under the North American Free Trade Agreement and permit cross-border trucking. American manufacturers and farmers are facing retaliatory duties on $2.4 billion worth of products as a result of the termination of a pilot program that allowed Mexican trucks access to the United States, as we agreed to do in 1993 when NAFTA was signed.

The tariffs have been in place for 13 months. The Administration has been promising a fix for almost as long. American manufacturers continue to lose market share, pay higher duties and take a hit on their bottom line. Tens of thousands of jobs are at risk if policy is not changed and thousands have already been lost.

Recent press accounts have been filled with a sense of hope that the Obama Administration is “close” to announcing a proposal to resolve the issue – that we will “soon” see a plan. But we’ve heard this before.

The current hope for a resolution springs from comments at a May 6 Senate Transportation, Housing and Urban Development Appropriations Subcommittee hearing. Sen. Patty Murray (D-WA) urged Transportation Secretary Ray LaHood to resolve the trucking dispute with Mexico during the state visit of President Calderon.

The Senator’s questions focused on the agricultural aspects of the trade dispute, and while we certainly sympathize with Washington state farmers, the Mexican tariffs are hurting manufacturers across the country, in all 50 states – about two-thirds of the $2.4 billion in exports subjected to tariff retaliation are manufactured goods.

Here’s the start of her question (from her web site, where you can listen to the Q&A as well):

Mr. Secretary, I want to ask one last question about an issue I brought up with you the last time you were before this subcommittee: cross-border trucking with Mexico and the devastating effect of Mexican tariffs on Washington state farmers.

Back in March, I urged you and the administration to move quickly to craft a plan to resume cross-border trucking with Mexico in a way that would address the safety concerns raised during the pilot and end the tariffs imposed by the Mexican government.

You told this subcommittee that a resolution would be forthcoming “soon.”

According to press accounts, LaHood said the DOT, cabinet members and Obama’s administration had “worked very hard to put a proposal together we will be announcing it very soon.”

He said, in response to the Senator: “We will come to Capitol Hill and brief every senator that has an interest in what it says; get feedback. Our intention is, President Obama’s administration’s intent is to restart this program. It’s part of NAFTA. It needs to be restarted. We believe if it is restarted these tariffs will be lifted.”

The secretary said they are “very close to briefing you and other senators” when Murray interrupted him.

“Very close,” she asked. “Sooner than soon?”

“It is closer than soon,” LaHood responded. Read More

Mexican Trucks, U.S. Cotton, Brazilian Retaliation

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The Dallas Morning News on Sunday does its own story on the anniversary of Mexico’s tariffs retaliating against the United States for violating NAFTA, also reporting on Brazil’s WTO-sanctioned tariffs retaliating against the U.S. cotton program, “Companies caught in the middle of U.S.-Mexico trucking dispute“:

“We have heard from American exporters,” U.S. Trade Representative Ron Kirk said Tuesday. “We understand the sense of urgency. We will work as quickly as we can to see if we can’t come up with an acceptable solution.”

Transportation Secretary Ray LaHood has assured exporters that he’s hopeful a deal can be reached soon. But he said the same thing a year ago.

“We have not yet floated any proposals with Mexico and look forward to consulting with members of Congress,” the department’s Federal Motor Carrier Safety Administration said Thursday in a statement.

The Mexican embassy in Washington issued a news release last week:

We continue to seek every opportunity for dialogue and engagement with the Administration and Congress on this issue, and we urge the former to come forward with a specific proposal to resolve the cross-border trucking impasse.

In the meantime, Mexico will continue to exercise all legal means available to achieve full compliance by the United States with its commitments under the NAFTA. The safety of Mexican carriers and drivers operating in the United States has been well documented by an Independent Evaluation Panel, the Inspector General of the U.S. DOT and the Congressional Research Service. Mexico is the United States’ second-largest export market and the second largest buyer of US exports. It remains a steadfast supporter of free and fair trade, and will continue to work actively and responsibly with Congress and the Administration to find a solution.

The Morning News story highlights the impact of the Mexican and Brazilian tariffs on Texas-based Mary Kay, the personal care products company that has paid $5.4 million in Mexican tariffs over the last year.

As for the Brazilian retaliation…

Here’s the list of U.S. products and tariff percentages applied by Brazil, from the Brazilian Embassy. We’ll also put the list in the extended entry section below.

Read More

A Year Later, Mexico’s Retaliatory Tariffs Harm U.S. Manufacturers

By | Economy, Trade | No Comments

Today we mark the anniversary of the imposition of retaliatory tariffs on a wide range of U.S. manufactured exports to Mexico. As a result of Congress yanking funding for a pilot program to demonstrate the safety of Mexican trucks operating in the United States –- and the program’s interim report showed they’re just as safe as U.S. trucks — $2.4 billion worth of U.S. exports to Mexico, ranging from grapes to dog food to refrigerators, have spent the last year facing high tariffs that have priced them far above similar products sold in Mexico by our competitors around the world.

This may not seem like an enormous issue, in the grand scheme of things, but it is real jobs that have been lost, real communities that in some cases have lost the major employer, and it is small and medium manufacturers (SMMs) who have been hit hard in particular. Over 95 percent of the firms that export to NAFTA are SMMs, and for many of them, loss of Mexico as an export market could be the difference between viability and closing up shop.

The National Association of Manufacturers has studied the impact of these tariffs, and found that about 16,000 U.S. manufacturing jobs have either been lost or are at risk of being lost as a result of their levy. Sixty-five percent of the targeted items are manufactured goods, including chemicals, paper and printed materials, household and personal care products, machinery, and processed food products.

There are three ways you can deal with these tariffs, and we’ve seen manufacturing in America try all three. You can shut down your U.S. production and move it to Mexico, Canada, or another country. That has happened. You can try and stick your Mexican distributors with the cost of the tariff. You can try to do that, but in many cases they’re just finding new suppliers from other countries, and the U.S. market share is dropping. Or, you can eat the tariffs as part of your cost of business. Adding a 20 percent tariff to your costs to try and preserve market share is, at best, a short-term solution that leads to loss of profits. Do it long enough, and you’ll be searching for alternate production lines in countries where they don’t face tariff retaliation. This takes the pain from the bottom line to the unemployment line, and it’s something many U.S. companies – after an entire year of facing such tariffs – are beginning to do. The situation is only going to grow worse in the coming months. Read More

Congress to Administration: Resolve the Mexican Truck Conflict

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A bipartisan group of House members — 27 Democrats, 29 Republicans — have sent Transportation Secretary Ray LaHood and U.S. Trade Representative Ron Kirk a strongly written letter demanding action and accountability on Administration’s plans to resolve the dispute over Mexican trucks on U.S. roads. “The current situation is unsustainable and untenable,” they write.

Not just the inaction, but the Administration’s failure to match words with deeds that frustrates the House members. Last March, Mexico hit more than 90 U.S. manufactured and agricultural goods with tariffs ranging (mostly) from 10 to 45 percent in retaliation for the U.S.’s failure to abide by its trade commitments on cross-border trucking. (See WSJ, Reuters.)

From the letter:

We are writing to express our concern about the lack of action and transparency by the United States Trade Representative and the Department of Transportation to address tariffs imposed by Mexico on U.S. agricultural and manufacturing products in response to the removal of the cross-border trucking pilot program. These tariffs have had a devastating impact on our local industries and area economies. Therefore, given the importance of this matter to our constituents, we urge you to immediately implement a plan of action to rectify this situation. …

Over the past 11 months, Administration officials have repeatedly expressed confidence that a resolution ot the current dispute could be found that would fulfill our obligations to Mexico under the North American Free Trade Agreement. President Obama expressed his commitment to resolving the issue to President Calderon during their meeting in Guadalajara, Mexico in August, 2009. However, to date, the Administration has not shared any of the principles or the parameters of a proposed plan.

The House members “implore” the LaHood and Kirk to work toward a quick solution, and they ask the officials to communicate their plans for resolving the issue.