NEWS ANALYSIS : Mexico Trucking Delay Signals Shift in NAFTA Support

Although the Clinton administration’s decision to delay the free movement of trucks between Mexico and the United States was billed as a temporary safety decision, some believe it was intended mainly to win election-year support from critics of the North American Free Trade Agreement and of this year’s White House bailout of Mexico.

Still, a short-term political maneuver would be less worrisome to NAFTA supporters than what some fear is the real reason: a weakening of President Clinton’s enthusiasm for the all-encompassing trade accord that, over time, will eliminate nearly all trade barriers between the United States, Canada and Mexico.

Thus, the actions that Clinton takes or doesn’t take to restart NAFTA’s trucking provision will speak volumes about how committed he is to free trade with Mexico and the rest of the hemisphere, said Gary Hufbauer, a trade economist with the Institute for International Economics in Washington, D.C.

Trucking may be NAFTA’s most important trade element, since 90% of all U.S.-Mexico trade moves via highway, Hufbauer said. The NAFTA clause, which gives U.S. and Mexican trucks free access to each other’s border states, would significantly lessen transportation costs, he said.

Transportation Secretary Federico Pena unexpectedly delayed it last Monday, the day it was to take effect, after the Teamsters Union--which would face new competition from Mexican truckers--filed suit to block it on safety grounds.

“At this stage, the administration could still, having considered the safety issues strongly raised by the Teamsters . . . make a decision over the next month or so to go forward and that would be regarded as a small hiccup. But if Clinton drags this out and goes to dispute resolution and it takes five months, I think it’s a major blow to NAFTA,” Hufbauer said.

It would be a blow because “trucking costs are a big part of integrating markets in the sense that if you can put stuff in a truck, keep it in the same truck and deliver the next day, that’s what an integrated market is all about,” Hufbauer said. “Allowing the free flow of trucks is as important, or indeed more important, than eliminating tariffs.”

Up until now, implementation of the accord has gone fairly smoothly with Clinton showing strong fealty to NAFTA after muscling it through Congress, despite some powerful opposition at home, particularly from organized labor.

But on Monday, the administration declared that trucking safety provisions needed more work, even though they had been completed after two years of binational meetings among government and trucking groups. U.S. officials have refused to say exactly what needs fixing.

In weekend protests at various border crossings, the Teamsters said Mexican drivers would soon be hauling toxic waste here without the same training and safety requirements that U.S. drivers must meet.

Mexico was caught off guard, and this week filed a formal protest over the postponement, only the second such complaint since NAFTA took effect two years ago.

Some warned against reading too much into the Clinton decision to postpone. European nations have been trying to hash out a universal trucking regime for 10 years and still cannot come up with a uniform code, Hufbauer said.

Moreover, state officials in California and Texas said earlier this month that they expected little immediate impact from the trucking clause had it taken effect. Permit applications for U.S. trucking firms for the right to operate in Mexico were not even available yet at several Mexican consulates.

But Mexico’s economic crisis--which prompted a $50-billion international bailout led by Clinton--has driven U.S. exports to Mexico down 10% this year and has lent support to the charge that NAFTA would cost U.S. jobs. And some observers say Clinton is merely reflecting a disenchantment with NAFTA felt by many in this country, including onetime supporter Sen. Bob Dole (R-Kan.), the leading Republican presidential candidate.

Said Geoffrey Dennis, head of Latin American equity research at Bear, Stearns & Co.: “Clinton’s action certainly symbolizes how the perception of NAFTA has soured in the United States, symbolic of NAFTA not necessarily being a good thing any more.”