Executive Briefings

Trade War Looms Over US-Mexican Trucking

The United States is experiencing one of its occasional bouts of protectionism with 'America First' policies affecting its economic stimulus package. It is also experiencing a low-level trade war with Mexico centered on trucking between the two countries.

After operating a long-standing ban on Mexican trucks crossing further than 25miles across the border, the US established the 'Cross Border Demonstration Project' in 2007, which gave Mexican drivers and vehicles the right to drive direct routes into US. This proved highly unpopular not least with American truck drivers who feared their wages being undercut by cheaper Mexican drivers, despite there being significant restrictions on the ability of Mexicans to engage in 'sabotage' within the US. The Mexicans did not help their case by their differing approach to road safety and the suspicion of many Americans that Mexican drivers had a limited grasp of road traffic regulations as well of the English language.

The result was that the 'Cross Border Demonstration Project' was terminated in March, effectively returning to a ban on Mexican drivers. However such a policy is a contravention of the 'North American Free Trade Agreement', which explicitly stated that such a ban should have been revoked in 1995, two years after the agreement was signed. The response of the Mexican government has been to impose several billion dollars worth of trade sanctions against the US.

Whilst this situation is not tenable in the long run, the politicians in Washington face a problem. Ray LaHood, the newly appointed American Federal Transport Secretary has stated last week that he would grant access to Mexican trucks "within a few months'. However to do this he needs to pass a bill through Congress, and Congress in its present protectionist mood does not want to support it. Ironically Mr. LaHood, who is a former Republican Congressman, voted against the Cross Border Demonstration Project in 2007, as did Barrack Obama whilst he was in the Senate. Somehow Mr. LaHood will have to persuade Congress to drop its opposition to Mexican trucks on American roads or face an escalation in the trade war between the two countries.
Transport Intelligence

The United States is experiencing one of its occasional bouts of protectionism with 'America First' policies affecting its economic stimulus package. It is also experiencing a low-level trade war with Mexico centered on trucking between the two countries.

After operating a long-standing ban on Mexican trucks crossing further than 25miles across the border, the US established the 'Cross Border Demonstration Project' in 2007, which gave Mexican drivers and vehicles the right to drive direct routes into US. This proved highly unpopular not least with American truck drivers who feared their wages being undercut by cheaper Mexican drivers, despite there being significant restrictions on the ability of Mexicans to engage in 'sabotage' within the US. The Mexicans did not help their case by their differing approach to road safety and the suspicion of many Americans that Mexican drivers had a limited grasp of road traffic regulations as well of the English language.

The result was that the 'Cross Border Demonstration Project' was terminated in March, effectively returning to a ban on Mexican drivers. However such a policy is a contravention of the 'North American Free Trade Agreement', which explicitly stated that such a ban should have been revoked in 1995, two years after the agreement was signed. The response of the Mexican government has been to impose several billion dollars worth of trade sanctions against the US.

Whilst this situation is not tenable in the long run, the politicians in Washington face a problem. Ray LaHood, the newly appointed American Federal Transport Secretary has stated last week that he would grant access to Mexican trucks "within a few months'. However to do this he needs to pass a bill through Congress, and Congress in its present protectionist mood does not want to support it. Ironically Mr. LaHood, who is a former Republican Congressman, voted against the Cross Border Demonstration Project in 2007, as did Barrack Obama whilst he was in the Senate. Somehow Mr. LaHood will have to persuade Congress to drop its opposition to Mexican trucks on American roads or face an escalation in the trade war between the two countries.
Transport Intelligence