US and Mexico resolve trucking dispute

10-Jul-2011 - Last updated on 11-Jul-2011 at 10:32 GMT

US and Mexican governments have signed an agreement to end a 17-year trucking dispute that has seen Mexico impose tariffs on a long list of US exports, including many food and agricultural products.

Under the agreement signed last week, Mexican long-haul truck drivers will be allowed to ship goods into the United States dependent on safety inspections, driver reviews and electronic vehicle monitoring to ensure drivers only make cross-border shipments, rather than domestic deliveries, among other restrictions. In return, half of the tariffs imposed over the past two and a half years have been lifted immediately, with the remaining 50 percent to be removed when the first Mexican truck driver is authorized to travel into the US – potentially within 45 days, according to agriculture secretary Tom Vilsack.

He said in a statement: "The agreement…is a major win for US agriculture, American jobs and our nation's economic prosperity.”

In retaliation for a US block on Mexican cargo trucks crossing the border, the Mexican government had introduced tariffs of five to 25 percent on 99 US products. A 20 percent tariff was applied last year to American chocolate and gum being shipped into Mexico, prompting an outcry from US confectioners. The National Confectioners Association said that $45m worth of confectionery exports had been subject to the tariffs despite US confectionery having “absolutely nothing to do with” the trucking issue.

Apart from chocolate and gum, other food items affected by the tariffs included a range of fruits, vegetables, nuts, seeds, juices, soups, sauces, cheeses, and pork products.

Vilsack said that the dispute had cost US businesses more than $2bn and reduced exports of affected commodities to Mexico by 27 percent.

"For US farmers and ranchers, the lifting of these tariffs means jobs and fiscal relief — lifting constraints on American products, removing barriers to trade with a key trading partner, and putting Americans back to work at a time when US agriculture is setting record export figures,” he said.

However, trucking union the International Brotherhood of Teamsters condemned the agreement. The union’s general president Jim Hoffa called it “a concession to multinational corporations that send jobs to Mexico.”

“It lowers wages and robs jobs from hard-working American truck drivers and warehouse workers,” he said.

The long road to agreement

In 1995, the US and Mexico, under the North American Free Trade Agreement (NAFTA), agreed to lift barriers on trucking goods from Mexico to the United States.

However, under pressure from labor groups citing environmental, road safety and competition concerns, the US continued to block Mexican cargo trucks from crossing the border.

Mexico took the issue to a dispute resolution panel in 2001, which recommended that the US comply with the NAFTA accord and allow Mexican trucks to cross the border.

In 2009, the Mexican government applied tariffs to 89 US products in an effort to put pressure on Washington to honor its NAFTA obligations, and last year added ten more, bringing the total to 99 US goods.