Wednesday, November 11, 2009

NAFTA's Commercial Trucking Provisions: Background and Implementation History

NAFTA set forth a schedule for implementation of its trucking provisions that would have opened
the border states to cross-border trucking competition on December 17, 1995, and all of North
America on January 1, 2000. However, because of known safety concerns with Mexican trucks,
the provisions were never implemented. The U.S. Department of Transportation (U.S. DOT)
decided that until safety concerns about Mexican trucks were resolved, the trucks would continue
to be restricted to the commercial zones just along the border. (These commercial zones generally
extend from about 3 miles to 20 miles into the United States at official ports of entry so that
Mexican trucks, after clearing customs, can continue on to make local deliveries).1 Mexican
trucks, inspected from January 1996-December 1996, were put out of service 45% of the time
compared to a U.S. truck out-of-service rate of 28%.2 At the time, Mexican drivers operated
without hours-of-service limits and maintained no driver log books. In addition, Mexican trucks
reportedly were not required to have front brakes and were allowed a gross vehicle weight 17,000
pounds heavier than allowed on U.S. roads. The wage differential between Mexican and U.S.
long-haul drivers was also an issue of concern. Some labor unions and their supporters expressed
concerns that the wage differential would lead to a loss of jobs for U.S. commercial truck drivers,
especially in the border states and along the major highway trade corridors in the United States.

Despite ongoing bilateral consultations aimed at bringing the Mexican trucks and drivers up to
U.S. safety requirements, no agreement was reached and in 1998 Mexico protested the
postponement of NAFTA trucking provisions under NAFTA dispute settlement procedures. The
final report of the arbitration panel concluded that the blanket refusal to process the applications
of Mexican motor carriers was in breach of the NAFTA obligations of the United States and that
alleged deficiencies in Mexico’s regulation of commercial trucking did not relieve the United
States of its treaty obligations. The panel did, however, state that the United States could subject
Mexican carriers to different requirements than those that apply to U.S. and Canadian carriers.3

The Bush Administration originally set the end of 2001 as a goal for the U.S. Federal Motor
Carrier Safety Administration (FMCSA) to begin processing Mexican applications seeking
operating authority throughout the United States. Congress, however, included 22 preconditions
for opening the border beyond the commercial zone to Mexican trucking in the FY2002
Department of Transportation Appropriations Act (P.L. 107-87). Among the 22 preconditions in
the act were the following requirements:4

• all Mexican motor carriers must undergo U.S. DOT safety examinations prior to
being granted provisional operating authority, with at least 50% of such carrier
examinations to be conducted on-site in Mexico;
• Mexican carriers applying to operate beyond the commercial zone must have a
distinctive U.S. DOT number (that distinguishes them from Mexican trucks
certified to operate within the zone only) and must undergo safety monitoring
initially and during an 18-month provisional period;
• Mexican motor carriers must all pass a full safety compliance review prior to
receiving permanent operating authority;
• federal and state inspectors must verify the validity of the license of every driver
carrying hazardous materials or undergoing a Level I safety inspection, as well as
the licenses of 50% of all other drivers;
• Mexican carriers, operating under provisional authority, and for three years after
receiving permanent authority, must display a Commercial Vehicle Safety Alliance
inspection decal (which are good for 90 days), verifying satisfactory completion of
a safety inspection;
• weigh-in-motion scales must be installed at the ten highest volume crossings;
• Mexican trucks may only cross at border crossings where a certified motor carrier
safety inspector is on duty; and
• a number of other safety reviews and studies must take place.

These requirements are in addition to requirements that predate the enactment of P.L. 107-87,
including requirements that Mexican carriers meet all U.S. safety (hours of service and log book
rules, alcohol and drug tests, etc.) and insurance requirements.5

On November 27, 2002, then Secretary of Transportation, Norman Y. Mineta, announced that all
the preconditions mandated in the FY2002 Appropriations Act had been met and directed the
FMCSA to act on the applications of Mexican motor carriers seeking authority to transport
international cargo beyond the U.S. border commercial zones.6 On January 16, 2003, however,
the Ninth Circuit Court of Appeals, in Public Citizen v. Department of Transportation, delayed
implementation pending completion of a National Environmental Policy Act (NEPA)
environmental impact statement (EIS) and a Clean Air Act (CAA) conformity determination.
FMCSA began the EIS process and has also filed a petition asking the Supreme Court to review
the 9th Circuit Court decision in Public Citizen v. DOT.7 On June 7, 2004, the Court reversed the
9th Circuit Court’s decision.8

In January 2005, the U.S. DOT Inspector General (DOT IG) issued a report that the FMCSA had
sufficient staff, facilities, equipment, and procedures in place to substantially meet eight of the 22
requirements which Congress had requested the DOT IG to review as specified in section 350 of
the DOT FY2002 Appropriations Act (P.L. 107-87).

In February 2007, the U.S. and Mexican Secretaries of Transportation announced a demonstration
project to implement certain NAFTA trucking provisions. As stated in the Federal Register on
May 1, 2007,9 the project was to demonstrate the ability of Mexico-based motor carriers to
operate safely in the United States beyond the commercial zones. This would be accomplished by
the Mexican-based carriers adopting certain safety programs and by the monitoring and
enforcement activities established by U.S. DOT. Up to 100 Mexico-domiciled carriers would be
allowed to operate throughout the United States for one year and Mexico would allow the same
for up to 100 U.S.-based carriers. The Mexican carriers and truck drivers were required to comply
with all U.S. regulations applicable to trucking, including those related to safety, customs,
immigration, vehicle registration and taxation, and fuel taxation. These trucks were to be
carefully monitored by FMCSA and state law enforcement, a joint U.S.-Mexico monitoring
group, and an independent U.S. evaluation panel. Data would be collected and evaluated at the
end of the demonstration project before considering further implementation of NAFTA trucking

On April 30, 2007 the U.S. DOT announced that the demonstration project would not start until
Mexico was ready with its reciprocal program to allow U.S.-trucks into Mexico.10

On May 24, 2007, with passage of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery,
and Iraq Accountability Appropriations Act, 2007 (P.L. 110-28, section 6901), Congress
mandated additional requirements before the project could begin. Among them was the
requirement that Mexico have its program to allow U.S. trucks to cross into Mexico ready to
proceed, that the FMCSA first seek public comment on five aspects of the demonstration project,
that the demonstration project meet the same requirements of a “pilot program” as defined at 49
U.S.C. 31315(c), and that the DOT IG review the U.S. DOT’s program as to whether sufficient
measures were in place to ensure the safety of Mexican trucks.11 This act also prohibited Mexican
carriers of hazardous materials and buses from participating in the demonstration project. On
August 17, 2007, the FMCSA announced its intent to proceed with the project, once the DOT IG
issued its review.12 On September 6, 2007, the DOT IG issued his report and U.S. DOT issued a
letter to Congress addressing the issues raised by the DOT IG. The demonstration project began
the same day.

On September 27, 2007, U.S. DOT announced that it would outfit long-haul Mexican trucks
operating in the United States with GPS devices (as well as U.S.-based long-haul carriers
operating in Mexico) in order to enforce hours-of-service and cabotage13 prohibitions, as well as
to time and date stamp border and state crossings. The U.S. DOT entered into a contract with the
DOD for $500,000 to install these devices and as of October 2008, almost all of the Mexican
trucks participating in the demonstration project had been outfitted. The U.S. DOT did not pay for
full GPS capability; the GPS units provide periodic (every 30 minutes or more) tracking “pings”
instead of continuous tracking.

In December 2007, Congress passed the FY2008 Consolidated Appropriations Act (P.L. 110-161)
which included a provision prohibiting any funding from being used “to establish” a cross-border
trucking program. The Administration concluded that the demonstration project could continue
because it had already been established. The Teamsters Union and environmental groups filed suit
in the 9th Circuit Court of Appeals in San Francisco and in oral arguments in February 2008
argued that the demonstration project should end, but a decision is still pending.

On March 11, 2008, marking six months of the project, the U.S. DOT testified before the Senate
Commerce Committee regarding the demonstration project and stated that FMCSA was
“checking”14 100% of the long-haul Mexican carriers as they crossed the border to check that the
vehicles have the proper safety decals (as a result of passing a pre-authority safety audit), the
driver has a valid license, and that the driver is proficient in English.15 (Statutorily, the FMCSA is
only required to check 50% of the drivers at the border for a valid license). A Mexican driver’s
English proficiency is tested by asking a series of questions in English and requiring the driver to
answer in English. The driver is also shown a set of U.S. road signs and the driver must explain
their meaning in either English or Spanish. The U.S. DOT also stated that since 1995, the
FMCSA had spent more than $500 million to improve border inspection stations and hired 125
federal safety inspectors, 149 auditors and investigators, and that the southern border states had
hired an additional 349 inspectors. The DOT IG also issued a six month interim report.16

On August 4, 2008 the U.S. DOT announced a two year extension of the project because only 29
Mexican carriers had participated thus far.

In October 2008, an independent evaluation panel (IEP) appointed by the FMCSA released its
report evaluating the demonstration project after one year.17 The panel consisted of a former U.S.
Representative, a former U.S. DOT Deputy Secretary, and a former DOT IG.

In March 2009, Congress passed the FY2009 Omnibus Appropriations Act (P.L. 111-8), which
included a provision with unequivocal language terminating the demonstration project. In
response to the abrupt end of the program, the Mexican government announced that it would
retaliate by increasing duties on 90 U.S. products with an import value of $2.4 billion. The tariffs,
effective as of March 19, 2009, range from 10% to 45% and cover a range of products that
include fruit, vegetables, home appliances, consumer products, and paper.18 The Obama
Administration has stated it is working on a new program to satisfy the concerns of Congress and
the country’s NAFTA commitments.19


1 The commercial zone is defined at 49 CFR 372, subpart B. A map of the zones and further details are available.

2 Roadside inspectors target trucks that appear to have a deficiency, so out-of-service rates would be higher than if
trucks were randomly chosen for a roadside inspection. U.S. General Accounting Office (now the U.S. Government
Accountability Office). Commercial Trucking: Safety Concerns About Mexican Trucking Remain. GAO/RECD 97-68.
Washington, GAO, 1997. p. 1-4. See also U.S. DOT, Office of the Inspector General, Motor Carrier Safety at the U.S.-
Mexico Border, Report Number: MH-2001-096, Washington, 2001. The IG found that the Mexican out-of-service rate
had improved to 37% for FY2000.

3 North American Free Trade Agreement Arbitral Panel Established Pursuant to Chapter Twenty in the Matter of Cross-Border Trucking Services; Final Report of the Panel. Washington, NAFTA Secretariat, 2001. p. 81-82.

4 U.S. Federal Motor Carrier Safety Administration final rules for implementation of the NAFTA trucking provisions
may be found here, here, and here.

5 Mexican carriers, planning only to operate in the commercial zone along the border, had to apply by October 20,
2003, for provisional Certificates of Registration. FMCSA made efforts to publicize this deadline to new and existing
Mexican commercial zone certificated carriers. The provisional Certificate cannot be made permanent for at least 18
months, until the carrier has passed a safety audit.

6 U.S. Department of Transportation. U.S. Transportation Department implements NAFTA Provisions for Mexican Trucks, Buses.

7 See U.S. Federal Motor Carrier Safety Administration. NAFTA Environmental Analysis; U.S. Department of Justice. Office of the Solicitor General. United States
Department of Transportation, et al., Petitioners v. Public Citizen, et al., on Petition for a Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit. Docket no. 03-358. Washington, the Department. 27 p. Available here; See also DOJ Supreme Court Appeal in
Mexico Truck Case Puzzles Activists. INSIDE Cal/EPA. Sept. 12, 2003. p. 14.

8 The Supreme Court’s decision reversing the 9th Circuit Court’s decision is available here.

9 72 FR 23883.

10 U.S. DOT Press Release, DOT 43-07, April 30, 2007.

11 see 72 FR 31877-31894, June 8, 2007 for the request for public comment.

12 see 72 FR 46263 – 46289, August 17, 2007.

13 Mexican-based carriers are not allowed to transport cargo from a U.S. origin to a U.S. destination, i.e. engage in U.S.
domestic transport of cargo.

14 The FMCSA used the word “checking” to describe this process because it is different than the process associated
with an “inspection” which is defined in regulations.

15 Written statement of Mary E. Peters, Secretary of Transportation, before the Senate Committee on Commerce,
Science, and Transportation, March 11, 2008.

16 DOT IG, Report # MH-2008-040.

17 Independent Evaluation Panel (IEP) Report to the U.S. Secretary of Transportation, U.S.- Mexico Cross-Border Trucking Demonstration Project, October 31, 2008.

18 For further information on the U.S.-Mexico trade relationship, see CRS Report RL32934, U.S.-Mexico Economic
Relations: Trends, Issues, and Implications, by M. Angeles Villarreal.

19 The White House, Office of the Press Secretary, Press Briefing by Press Secretary Robert Gibbs, March 16, 2009.
See also, Lisa Caruso, “Jump Starting Mexico’s Trucks,” The National Journal, March 28, 2009; and “LaHood To
Share Mexico Trucking Proposal With Congress Soon,” Inside U.S. Trade, May 1, 2009.

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