Customs Update: New turn for Mexican trucks?
2/01
Published in The Journal of Commerce February 22, 2001A number of interesting legal decisions have been published in the past month, but the one garnering the most attention is, of course, the decision regarding trucking and the North American Free Trade Agreement (Nafta).
Prior to Nafta, Mexican-owned trucks had legal access only to what used to be called the ICC 50-mile zone, that is, they could transit anywhere within 50 miles north of the U.S.-Mexico international border. Under the terms of Nafta, operations were to be allowed so that Mexican trucks could legally operate anywhere in the U.S. southern border states (Arizona, California, New Mexico and Texas) starting in December, 1995 and anywhere within the country starting in January, 2000.
The issue of Nafta and Mexican trucks reemerged when the Clinton Administration decided to bar all Mexican trucks from entering the U.S. beyond the immediate 50-mile zone, for safety reasons. While agreeing that safety regulations were important, Mexico challenged the blanket ban before a Nafta arbitral panel. On February 6, 2001 that panel issued its decision.
What it said was the U.S. could not refuse to allow all Mexican trucks to enter the country. Some press coverage has included predictions of doom and gloom, going so far as to suggest American highways will be in carnage. In fact, what the arbitral panel said was the U.S. could not ban all Mexican trucks but it could apply its safety standards on a case-by-case basis. The U.S. based its position on what was described as the inadequacies of the Mexican regulatory system related to such issues as driver hours of operation, logs, and other factors.
The Nafta arbitral panel stated that it was not determining what, if any, safety standards should apply; nor did it disagree that safety of trucking services is a legitimate regulatory goal. The panel also said it was not advocating a quota or the approval of any or all Mexican applications. In fact, reading the Findings and Determinations carefully, one sees a statement saying that not all the Mexican truck companies currently operating in the U.S. border zone must be allowed to continue their operations.
The panel's holding also recognizes that different standards may be warranted depending on the citizenship of the applicant trucking company. However, if different standards are applied to truckers from Canada and Mexico, those differences must arise in good faith, be based on legitimate safety concerns and be Nafta-compliant. In other words, a blanket refusal is not allowed.
It should also be kept in mind that the safety issue, as legitimately important as it is, has been somewhat distorted. California and Texas are the two states where the most number of trucks cross from Mexico into the U.S. In both cases, the state departments of transportation have modern facilities available to conduct just the sort of safety inspections one would hope to see imposed. No one is foolish enough to believe that all trucks crossing the border will be inspected but the point is, the two states most seriously impacted by this truck traffic have publicly stated their readiness to conduct the necessary inspections.
Additionally, there is the out-of-compliance issue which underpins much of the discussion about safety concerns. The U.S. Department of Transportation released a survey which found 28 percent of U.S. trucks were out of compliance, while 35 percent of Mexican trucks were similarly situated. At first glance, that seven percent difference seems huge. Put into proportion, one must keep in mind that many of the Mexican trucks inspected were those which did nothing more than pull trailers across the international border. Many took cargo from Mexican long-haul drivers, hooked up to it, transited the international border and then handed the cargo off to American truckers shortly thereafter. As such, if given the opportunity to deliver Mexican cargo to U.S. consignees, one would not expect the trucks previously inspected to be the ones used. If they are, they should be inspected and turned back if out of compliance. However, Mexican truckers are not going to employ their newest equipment to sit in long waiting lines in order to transport cargo only a few miles. It makes no sense economically.
Strikingly missing from these discussions has been wide spread interest on the part of American truckers to deliver cargo in Mexico. Perhaps it has to do with the cost of American rigs and the condition of some Mexican roads. Perhaps it has to do with fears about personal or property safety. These are legitimate concerns. However, more progressive American truckers have begun partnerships with Mexican operators in order to maximize their opportunities.
The big question is, how will the Bush Administration respond? Early indications are it will comply with the panel's decision. The question of how remains open. It could be that the pending Mexican trucking applications will simply be reviewed relying on current standards. There could be an attempt to develop and apply new standards. Stay tuned as this contentious issue plays itself out to conclusion.
S.K. Ross & Assoc., P.C.
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Los Angeles, CA 90045-5659
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