Mexican Border to Open by End of Year

Mexican trucks will be able to haul international freight throughout the United States by the beginning of next year, if the Department of Transportation’s timetable holds.

And within the next couple of months, according to the schedule, Mexicans will be able to invest in or establish international trucking companies in the U.S.
Transportation and trade officials from both countries agreed on this much at a March 22 meeting in Mexico City. What remains to be determined are the details of a regulatory scheme to ensure the safety of Mexican trucks as they ply U.S. Interstates.
The Federal Motor Carrier Safety Administration is working on a proposal that will require Mexican companies to comply with all U.S. safety and operating standards. They will, for example, have to maintain driver qualification records and ensure that drivers undergo drug and alcohol testing. They also will have to obtain insurance through a company licensed in the U.S.
In fact, Mexican companies face a host of compliance issues over and above U.S. safety rules. They must unravel a complex set of cabotage and customs rules governing domestic operations of a foreign entity (see "Concerned About Cabotage"). Their equipment will have to comply with U.S. standards enforced by the National Highway Traffic Safety Administration. They will have to abide by U.S. size and weight restrictions, pay U.S. fees and taxes, and provide cargo insurance. And then there are ordinary business concerns, such as contracts, leases, taxes and environmental rules, to name a few.
Around 190 Mexican trucking companies have longstanding applications for authority in the U.S. It is not yet clear whether they will have to reapply under the new regulatory scheme.
These general terms are the first step in negotiations to resolve a conflict between the U.S. and Mexico over the North American Free Trade Agreement.
Under the agreement, Mexican and U.S. trucks were supposed to get access to border states in 1995, and to the entirety of each country last year. But the Clinton administration, under pressure from labor unions concerned about jobs and safety, reneged on those terms. Mexico protested, and last year a NAFTA arbitration panel agreed that Mexico has been harmed and deserves reparations.
According to Dave DeCarme, head of DOT’s Maritime, Surface, and Facilitation Division, Mexico is refraining from demanding reparations right now. He said that at the Mexico City meeting, "Mexico was pleased with what they saw as a sincere commitment on the part of the U.S. to address the issues in a constructive way."
While the border opening is reciprocal – U.S. trucks will have equal access to Mexico – the investment provisions are more protective of Mexico. Mexicans will be able to invest in or own 100% of international freight transport companies based in the U.S., but U.S. citizens will be limited to 51 percent ownership in Mexico. Full investment rights will not come to U.S. citizens until Jan. 1, 2004, a provision of NAFTA intended to protect Mexican companies from their larger, better capitalized competitors from the north.
DeCarme also said that DOT intends to invest more money in safety enforcement. That is partly in response to pleas from some of the border states, Texas in particular, for federal assistance. DeCarme said President Bush’s budget for the next fiscal year will contain more money for inspectors and border facilities.

Also see today's story, "U.S., Mexican Truck Safety Systems Different."