Mexico Suspends Fee on Vehicles From U.S.

Faced with angry opposition from both sides of the border, Mexican officials Thursday night announced the suspension of a controversial program to charge drivers of U.S.-registered cars up to $800 to cross the border into Mexico.

On orders from President Ernesto Zedillo, the program--which went into effect Wednesday--is suspended “until further notice,” the Interior Ministry said in a news release.

During that time, officials will conduct a “careful analysis” of the program to come up with modifications, the release said.

Under the program, people taking their cars past a 15-mile strip along the U.S.-Mexican border were required to pay a refundable deposit of up to $800, depending on the age of the vehicle. Drivers could recover their deposits if they left the country within six months.

The Baja California peninsula and some parts of Sonora state were exempted to preserve easy access to Mexico’s west coast beaches.

The Mexican government said the car-deposit program was necessary to prevent the illegal importation of U.S.-registered cars into Mexico and to protect the domestic car industry. Opponents of the plan said it would damage Mexico’s tourism industry.

Mexico’s Senate on Thursday added its voice to the chorus of program opponents, urging the government to terminate it.

The president’s decision was in response to that request as well as to the vehement opposition from across the border, the news release said.

New cars cost nearly 20% more in Mexico than in the United States, according to car dealers based at the Mexican border. Used vehicles are one-third cheaper in the U.S.

The high Mexican car prices, coupled with Mexico’s taxation on car ownership, have created a huge market for illegal car imports, infuriating Mexican car dealers.