U.S., Mexico Agree to Resolve Lingering Trucking Dispute

President Obama and Mexican President Felipe Calderón say they have agreed on a "path" toward resolving their protracted North American Free Trade Agreement cross-border trucking dispute and the eventual lifting of retaliatory Mexican tariffs on more than $2 billion in U.S. goods.

President Obama and Mexican President Felipe Calderón say they have agreed on a "path" toward resolving their protracted North American Free Trade Agreement cross-border trucking dispute and the eventual lifting of retaliatory Mexican tariffs on more than $2 billion in U.S. goods. At a joint press conference with Calderon after a White House meeting, Obama said he was "especially pleased" that the two sides have found a "clear path" to resolving the trucking dispute. 

"I look forward to consulting with Congress and moving forward in a way that strengthens the safety of cross-border trucking, lifts tariffs on billions of dollars of U.S. goods, expands our exports to Mexico and creates jobs on both sides of the border," Obama said. 

The agreement in principle contemplates a reciprocal, phased-in program with the highest safety standards, authorizing both Mexican and U.S. long-haul carriers to engage in cross-border operations under NAFTA, according to a White House fact sheet. 

U.S. and Mexican negotiators are continuing to iron out details and expect to have a draft final agreement "very soon," the fact sheet said. As soon as all of the details are in place, the administration will confer with Congress and publicly share the proposed agreement and seek comment, the White House said. 

According to an American Trucking Associations press statement, the tentative agreement upholds the requirement that Mexican fleets apply for and receive authority from the Federal Motor Carrier Safety Administration. The ATA said Mexican trucks must also meet the same safety standards as U.S. fleets. 

Once a final deal is reached, Mexico will suspend retaliatory tariffs it imposed in stages. When the agreement is signed, Mexico will reduce tariffs by 50 percent and suspend the remaining 50 percent after the first Mexican carrier is granted operating authority under the program. All current tariffs will be ended by Mexico once the program is in place. 

NAFTA had called for cross-border trucking to be phased in beginning in 1995. However, the provision was blocked by the Clinton administration and the U.S. Congress, which had routinely prevented the provision from moving forward by denying funding in spending bills, citing safety concerns about Mexican trucks on U.S. roads. 

In 2007, the Bush administration launched a pilot program to comply with the NAFTA provisions. However, Congress cut off funding, and the pilot program was shut down in 2009. 

The standoff led Mexico to impose the retaliatory tariffs on $2.4 billion worth of U.S. products in March 2009, including key agricultural exports such as pork, because of U.S. noncompliance with NAFTA trucking provisions. Mexico subsequently revised the tariff list. The new list of 99 items targeted U.S. products with greater exports to Mexico than the previous list of 89 goods in order to increase the economic consequences for U.S industries. 

According to the National Pork Producers Council, Mexico's retaliation in the trucking case included a 5 percent tariff on U.S. bone-in hams and 20 percent on cooked pork skins in retaliation. Mexico is the second largest market for the U.S. pork industry, which shipped $986 million of pork south of the border in 2010. However, says NPPC, since 1993 –– the year before NAFTA was implemented –– U.S. pork exports to Mexico have increased by 780 percent.

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