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Resolution to Cross-border Trucking Dispute On Hold

September 23, 2009

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Roy Kienitz, the Department of Transportation's undersecretary for policy, does not expect the Obama administration to move on resolving the cross-border trucking issue this year, according to an article in Inside U.S. Trade
. The publication reported on Kienitz's comments during a meeting with the Alliance to Keep U.S. Jobs last week, during which the Alliance hoped to move toward bringing an end to the Mexican trucking dispute.

During the September 15 meeting, Kienitz told the Alliance that the issue was out of the DOT's hands and would have to be resolved by officials in the White House at this point, who are occupied with Obama's health care reform these days.

The dispute involves allowing Mexican trucks to haul cargo beyond the U.S. border. Under the North American Free Trade Agreement, the crossing was supposed to have been opened to border-state traffic in 1995 and to long-distance traffic in 2000. The opening was stalled until 2007, in part by difficult negotiations with Mexico, but mainly by the legislative and legal tactics of U.S. labor, owner-operator and citizen advocacy groups who fear loss of U.S. jobs to Mexican drivers and argue that Mexican trucks will not be safe.

A pilot program, which went into effect September 2007, involved up to 100 trucking firms from Mexico transporting international cargo beyond the commercial zones along the U.S.-Mexico border. Mexico also allowed up to 100 U.S. trucking firms to do the same. On Aug. 4, 2008, the program was extended for two years, but when President Obama signed the Omnibus Appropriations Act into law in March 2009, funding for the program ended, due to safety concerns.

Mexico retaliated by imposing penalty duties on $2.3 billion in imports from 89 products from the U.S., with an immediate duty cost of about $421 million.

Many groups, including the Alliance to Keep U.S. Jobs, are urging the government to resolve the situation, as a result of these retaliatory tariffs.

In August, a group of former U.S. Cabinet members and U.S. Ambassadors to Mexico sent a letter to President Obama asking him to act, stating that the tariffs are affecting U.S. companies, farmers and workers. The letter also says that the delay is damaging the country's credibility with global trade partners.

"The United States unequivocally promised in the NAFTA to let Mexican and U.S. trucks deliver international goods throughout each other's countries, eliminating the needless cargo transfers now required. 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," the letter said.

Separately, a new study by the U.S. Chamber of Commerce says that by not going through with the pilot program that opened the border to commercial truck traffic, the government caused $2.2 billion in higher costs for U.S. families and companies, $2.6 billion in lost U.S. exports, and more than 25,000 lost jobs for American workers.

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