Wall Street Journal – Mexican Truck Stop
Editor’s Note: To the consternation, I’m certain, of the opponents of the cross border program, another well respected news organization is questioning the hypocrisy behind the opposition to Mexican trucks.
By MARY ANASTASIA O’GRADY
November 26, 2007; Page A20
It’s hard to say who came out on top in the Nov. 15 debate among Democratic presidential candidates held in Nevada. But we do know that free trade took a beating. A majority of the candidates disapproved of some or all of the U.S. bilateral and regional trade agreements — including the North American Free Trade Agreement — and pledged to reverse the trend toward market opening if given the chance. Hillary Clinton stopped short of promising to undo Nafta but she called for a “trade timeout.”
It is troubling to hear the protectionist drumbeat growing louder in the Democratic Party, particularly as it concerns Latin America. The last time Washington adopted an anti-trade bias by signing into law the Smoot-Hawley tariffs in 1930, it set off a world-wide depression — and a period of isolationism in Latin America that took some 60 years to begin to reverse. Now Democrats seem to be saying that if they can only capture the White House, they are committed to reliving this painful history.
The Democrats’ anti-trade agenda is already playing out in Congress, with both houses continuing to block the full opening of the southern border to Mexican long-haul trucks under Nafta. Congress’s actions could damage the U.S. economy because Mexico has the legal right to retaliate. What’s worse is what this flouting of U.S. commitments to Mexico suggests to the Mexican people about Yankee integrity.
The problem dates back to 1995, when Bill Clinton issued an executive order — in violation of Nafta, which he had signed into law — to stop Mexican long-haul trucks from crossing the border. Mr. Clinton was responding to pressure from Teamsters, who didn’t want any new competition. He cited safety concerns — things like substandard drivers and vehicles — which to this day have never been supported by evidence.
In fact, Mexican trucking companies have a long history of operating in the U.S. and with no notably inferior safety record. Yet their numbers have been limited since 1982, when the Reagan administration announced that until Mexico opened its markets to U.S. competitors, no new licenses would be granted to Mexican carriers. Existing Mexican long-haul trucking businesses had their permits grandfathered, and from 1992-2002 some 1,300 Mexican-domiciled companies — all of which were majority U.S.-owned — received “certificates of registration” to deliver “exempt commodities” from Mexico to the U.S.
In other words, there have been plenty of Mexican trucks on U.S. roads all these years — although not as many as there might be under Nafta. Nevertheless, in a 2002 appropriations bill Congress demanded that they be subject to a new set of safety regulations, some of which are more stringent than U.S. standards. Since that year, the Department of Transportation’s Inspector General has audited the safety process at the border annually and has been able to certify that it is working. Mexican carriers are also more heavily insured than their U.S. competitors. Every Mexican truck is required to carry U.S. insurance on top of the insurance it carries in Mexico.
Earlier this year, the DOT analyzed the safety record of Mexican carriers in the U.S. from 2003-2006. It looked at the rate in which trucks received an “out-of-service” designation by DOT inspectors targeting companies with the worst records. The out-of-service rate for U.S. trucks was 23.5%, compared to a rate for trucks from Mexico of 21.29%. Mexican short-haul trucks operating in the border zone also had a better record than the U.S. trucks, with an out-of-service rate of 22.5%.
These statistics ought to be enough to end the debate. But with Teamster pull still strong in Congress, the Bush administration this year offered to introduce a pilot program to allow a limited number of new trucking companies to begin doing business in the U.S. under close DOT scrutiny. The program kicked off on Sept. 6, and there are now seven Mexican companies operating 44 vehicles in the U.S. and four U.S. companies operating 41 vehicles in Mexico. You’d think that those with safety worries would be glad to see such a vigilant approach to the problem. But just after the program started, both the House and the Senate voted to strip its funding in the 2008 budget.
It’s not clear whether this budget cut will be sustained. But the effort makes it obvious that Congress is no honest broker. As John Hill, administrator of the Federal Motor Carrier Safety Administration, told me last week: “Every time we move closer to implementing the provisions of Nafta, Congress adds a new provision. It’s hard to hit a moving target.”
Mr. Hill also challenges the charge that Mexican trucks are not safe. “We’ve applied strong enforcement guidelines and Mexico has met them. The opponents of Nafta are looking for any way they can find to drum up fear among Americans, even though Mexican trucks have been operating safely in this country for years.”
Mexico doesn’t have to sit still for this. In February 2001, a Nafta arbitration panel issued a unanimous decision against the U.S. block on Mexican long-haul trucks. Mexico could retaliate with import tariffs on U.S. goods to the tune of $2 billion. In the Nov. 20 issue of the Latin American business magazine Poder y Negocios, Mexican Secretary of Communications and Transportation Luis Tellez said that his country has not ruled out that possibility.
He also expressed frustration with Congress: “The problem is that the Congress is no longer in the frame of mind in which it sees Nafta as something important or something that the U.S. government has to comply with.” There are those in Congress, he said, who don’t have a clear idea of what Nafta is and others who don’t want to “lose points and Teamster support.”
During the free trade bashing in Nevada, Mrs. Clinton said that instead of signing new agreements, we “need to get back to enforcing the ones we have, which the Bush administration has not done.” When it comes to Nafta and the Mexican trucks we can all agree on the first part of that statement, but the fault lies with Congress, not the president.
• Write to O’Grady@wsj.com