Mexico’s New Vehicle Fee a Clunker, Critics Charge

To this village of adobe huts and hard-working peasants in cowboy hats, the 20th century arrived only recently--and it came on wheels. It came in the form of battered pickups with license plates from Texas, Oklahoma and California, vehicles much cheaper than anything the farmers could find here.

The trucks have changed the lives of locals such as Sergio Rodriguez, who used to plod six hours to and from his fields in a donkey-drawn cart, much as his ancestors had. These days, he zips to his plot of chile peppers and beans in a 1986 Ford Lariat pickup sent by his brother in Texas.

“These are a huge help for us Mexicans,” said Rodriguez, patting the blue-and-cream truck as though it were a beloved steed.

Now, however, the government is cracking down on such gift horses. In a step that has drawn the wrath of everyone from Mexican peasants to members of the U.S. Congress, authorities here are imposing a tough new measure on all foreign vehicles crossing into Mexico’s interior starting Wednesday. Their goal: to enforce this nation’s law banning imports of dirt-cheap American used cars and trucks.

“The previous measures have been totally ineffective,” said Marco Provencio, spokesman for the Finance Ministry, noting that migrants and contraband gangs have flooded Mexico with illegal U.S. vehicles.

But many say the government’s cure may be worse than the disease. Critics say the new measure, which requires occupants of U.S. vehicles entering Mexico to leave deposits of up to $800 at the border, will cause economic damage in both countries. It could dissuade hundreds of thousands of visitors, especially Mexican Americans making their annual Christmas pilgrimage to their homeland.

Even though the Baja peninsula is exempt, the regulations could affect many people in Southern California, whose most direct route to their native Mexican states winds through Arizona, New Mexico and Texas.

“This will hurt the country’s economy,” protested Ricardo Monreal, governor of Zacatecas state, where Casa Blanca is located. “Many of our paisanos who come every year, bringing money to their hometowns, don’t like these measures.” This year, he fears, they may not come at all.

Mexican immigrants have been bringing illegal U.S. vehicles here since the 1950s, often as gifts for needy relatives in remote rural areas. But in recent years, as migration to the United States has increased and Mexican roads have improved, the number of such cars and trucks has soared to about 1.5 million, say officials--one out of every 10 vehicles in Mexico.

The appeal of the contraband cars is obvious: Used vehicles are one-third cheaper in the United States. That’s because Americans, with their higher incomes and easy access to credit, trade in their cars more often, creating a vast pool of secondhand vehicles whose prices drop quickly. In poorer Mexico, where the interest on car loans runs 30% or more, the average auto is 13 years old and used cars fetch high prices.

In this age of bustling cross-border trade, it would seem such a price difference couldn’t last long. But powerful auto makers with factories in Mexico--DaimlerChrysler, Ford, General Motors, Nissan and Volkswagen--won long-term protection in the 1994 North American Free Trade Agreement, and the Mexican market will not be completely open to U.S. used cars until 2019. Meanwhile, the temptation to illegally import a cheap U.S. vehicle--known here as a “chocolate”--is enormous.

“Here, I couldn’t buy one of these. It costs a lot of money,” said Rodriguez, 34, driving his pickup piled with chile peppers through the washboard-rough dirt roads of Casa Blanca, about 25 miles east of Zacatecas city.

Rodriguez estimated that in Mexico such a truck would cost about $4,000--twice the U.S. price and an astronomical amount for a farmer who earns $5 a day.

For years, Mexican authorities tolerated the “chocolates.” Since the mid-1970s, politicians have passed eight amnesties for the illegal vehicles already in the country, usually in exchange for votes around election time. When authorities did try to seize the vehicles, powerful peasant groups blocked roads in protest.

But the cars and trucks have increasingly become a headache for authorities. Owners don’t pay state tax on them, and it is impossible to trace the vehicles in case of a crime or accident. Meanwhile, the auto makers, which are responsible for 18% of Mexico’s manufacturing jobs, have pressured the government to keep the vehicles out.

“We have to assure the development of the industry,” said Provencio, the Finance Ministry spokesman.

To block the contraband, the government is taking aim at the border. In the past, occupants in nearly all of the 750,000 foreign-made vehicles that passed annually beyond the 15-mile border zone into Mexico’s interior paid $11 for a permit to remain for up to six months. At the end of the period, however, many of the cars and trucks failed to return to the United States.

Now the government will charge deposits of $400 to $800, based on the vehicle’s age, to drive past the border zone. The fee can be paid with a credit card and will be reimbursed at any border crossing, authorities say.

The government hopes the high deposit will encourage drivers to take their vehicles back to the United States. But in states like Zacatecas, officials fear an unintended effect: “People won’t come here at all,” said Guillermo Huizar, finance director for the state.

That could be a crisis for Zacatecas, where nearly half the population has moved to the United States. Every Christmas, the state’s hardscrabble farming villages come alive with returning relatives from California and other U.S. states bringing TV sets, cars, clothes and money for fiestas--an $80-million injection, state officials estimate.

“This is critical,” said Huizar.

Jeffrey Davidow, the U.S. ambassador to Mexico, acknowledged the serious illegal car problem and said Mexican authorities have a right to impose the new measures. But he said the regulations will cause harm in Mexico and in U.S. cities that thrive on cross-border travel.

“Many Mexican families in the U.S. can’t afford air tickets. The only way they can afford to do this [come to Mexico] is getting in the car and going to see Grandma. Charges of $400 to $800 will have an impact and make it difficult,” Davidow said, noting that some Mexican Americans don’t have credit cards with high spending limits.

The new measure has provoked anger on all sides. In the United States, the Congressional Border Caucus, whose members come from border states, has called on President Clinton to intercede. Outraged Mexican American groups in Texas and California are calling for a boycott of Mexican beer and other products.

In Mexico, the illegal-car issue is pitting peasants against industrialists and legislators against the central government.

Farm groups claim the issue is one of unfair protectionism. The auto industry, they say, isn’t hurt by peasants importing secondhand trucks; the farmers could never afford new vehicles in Mexico.

And they say it’s unnecessary to shelter an industry that exports two-thirds of its production, mainly to the United States.

“In the end, these industrialists want to turn us into something like Cuba. There will be no cars for the poor,” declared Salvador Rivera, a senior official with the giant National Confederation of Peasants, which is part of the long-ruling Institutional Revolutionary Party.

But auto makers say contraband gangs have taken advantage of the lax border controls to import not only beat-up pickups but late-model vehicles. The auto makers argue that they already face an unfair burden because of the heavy Mexican taxes on new cars, which make them 15% to 30% more expensive than the same makes and models sold in the U.S.

“This has become a business, a mafia. There are organizations that practically go door to door offering these cars,” declared Fausto Cuevas, director of the Mexican Automobile Industry Assn.

In fact, authorities have no figures on how many of the vehicles have been imported by hard-working peasants and how many by criminal gangs. Either way, they say, they must act.

The government is facing further pressure from rebellious governors who have begun to take matters into their own hands. In Chihuahua, which borders Texas and New Mexico, Gov. Patricio Martinez found upon taking office last year that half the vehicles in the state were illegal, making it impossible to control the roads.

Martinez decided to register and tax U.S. cars that had already been brought into Chihuahua--a step that infuriated the national Finance Ministry, which has jurisdiction over imports. The federal government has taken Chihuahua to the Mexican Supreme Court.

Despite the outcry over the new border regulation, many Mexicans believe it won’t fundamentally alter the illegal-car trade. Because vehicle prices are so much lower in the United States, contraband gangs may merely tack on the new border charge to vehicles they sell in Mexico.

And even as the government prepares to impose the fees, Mexican legislators are discussing another amnesty for contraband cars already in the country, probably before July’s key presidential election.

To the pickup-driving peasants of Zacatecas, the car trade is much like other forms of illegal border-crossing that continue despite government attempts to police the frontier.

“Even if they shut the border, people will keep bringing in foreign vehicles,” said Jose Antonio Martinez, a local director of the national peasant organization. “It’s like the metal wall they’ve put up at the [U.S.] border. People keep going over.”

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How Mexico’s New Car Fees Will Work

Here are details of Mexico’s new regulations for bringing U.S. cars into the country:

WHO: The regulations apply to all motorists driving U.S. cars south of the 15-mile border zone. However, they do not apply to the two states that make up the Baja California peninsula.

WHAT: Motorists will be required to leave a deposit at the border, which they can reclaim on their return through any border crossing. The deposit is $400 for vehicles from model year 1993 or older, $600 for 1994-98 models and $800 for newer models. Payment can be made by credit card.

WHEN: Starting Wednesday.

WHY: It is illegal to import used U.S. vehicles into Mexico, but a booming contraband trade has developed because secondhand American vehicles are much cheaper. The Mexican government is trying to halt that trade. In the past, drivers of U.S. cars could get a six-month permit for $11. But many of those cars were never brought back across the border.