CANACAR prepares to demand compensation for US Non-Compliance with NAFTA Trucking Provisions

CANACAR Executives with 2013 Prostar
CANACAR Mexico executives in front of a 2013 Navistar Pro Star painted for the upcoming Mexican Independence Day celebrations
Interesting, but not unsurprising news coming out of Mexico this week as T21mx, an industry trade magazine is reporting that CANACAR is vigorously pursuing ratification of it’s 2009 arbitration action against the United States for it’s willful non compliance with the trucking provisions of NAFTA. The lawsuit seeks compensation for all Mexican carriers who have been damaged economically by the United States refusal to fully open the border as required under NAFTA,  and the Pilot Program that was established at the urging of US protectionist interests in an effort to keep Mexicans out of the country.

According to the article , any damages recovered would go into a trust fund to assist truckers in replacing units that were 20 years or older. Currently, the SCT, Mexico version of the FMCSA is pushing a bill through the Mexican Congress that would ban commercial vehicles more than 20 years old from Mexican highways.

CANACAR’s action comes as the Ministers of Economy, Transport and Communications prepare for talks with their US counterparts in which one issue to be raised will be acknowledgement that cross border drayage trucks are an integral part of the supply chain and should be recognized as such by both countries Customs authorities.

The Obama administration, because of it’s continuing dispute with Mexico over the trucking issues, finds it difficult if not impossible to enter into other trade agreements that would benefit the US. Thus, Mexican interests want this resolved.

CANACAR ARBITRATION ISSUES

In April 2009, shortly after Congress cut funding for the previous cross border program, CANACAR filed a Notice of Arbitration with the US Department of State.  The notice provided claim that the United States had violated three provisions of NAFTA Chapter 11:

(a) Article 1102 (national treatment);
(b) Article 1103 (most-favored nation treatment), and
(c) Article 1105 (minimum standard of treatment).

In asking for relief and compensation, CANACAR has claimed losses to the Mexican trucking sector to be in excess of $2 billion dollars and is asking for that and all costs incurred since the inception of the Unites States refusal to comply with the agreement.

DISCRIMINATION AGAINST MEXICAN CARRIERS

Although the United States agreed in NAFTA to phase out its moratorium against Mexican carriers, the United States has acted entirely to the contrary, singling out Mexican carriers as the sole group in the World that is prohibited from obtaining authorization to provide trucking services in the United States.

The U.S. “flagging” action, which concludes without support or inquiry that Mexican motor carriers, as a class, are too dangerous to be allowed in the United States is discriminatory, factually inaccurate, and an intrinsic denial of national treatment. U.S. carriers, unlike Mexican carriers, are entitled under U.S. law to both (1) consideration on their individual merits and (2) a full opportunity to contest the denial of operating authority. Both of these rights have been denied to Mexican Investors in violation of NAFTA.

Claimants are denied most-favored-nation treatment in that the U.S. Government accords national treatment to Canadian motor carriers (indeed carriers from any nation in the world other than Mexico), with none of the restrictions imposed on Mexican carriers.

The discrimination in favor of United States’ interests is manifest. The United States permits roughly 150 Mexican-domiciled carriers who claim majority U.S. ownership to operate freely in the United States despite alleged deficiencies in the Mexican truck regulatory system.

Similarly, until 1999, four years after restrictions on cross-border trucking were to be lifted under Annex I, the United States permitted U.S. motor carriers to lease Mexican trucks and drivers for operations in the United States.

In other words, U.S.-owned entities can use Mexican trucks and drivers in the United States, but Mexican-owned carriers cannot.

We’ll continue to monitor this situation and report on it as it develops.

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This post is part of the thread: Mexico Cross Border Pilot Program – an ongoing story on this site. View the thread timeline for more context on this post.