U.S. Seeks Delay in Key NAFTA Issue With Mexico

The White House has ordered the U.S. trade representative to further delay implementation of a key provision of the historic free trade pact with Mexico--and senior trade and State Department officials say that the maneuver is intended to ensure Teamster political support for Vice President Al Gore.

The provision to open U.S. roads to Mexican trucks is vehemently opposed by the International Brotherhood of Teamsters, which fears competition from Mexican trucking firms. A central element of the North American Free Trade Agreement signed in 1993 involving the United States, Canada and Mexico, the trucking clause is key because 90% of all U.S.-Mexico trade moves via highway.

The NAFTA provision, which gives U.S. and Mexican trucks free access to each other’s roads, goes to the heart of the open market envisioned under the agreement. But the United States has refused to implement it for five years, amid intense pressure from labor interests who insist that more assurances are needed that Mexican trucks are safe.

In September 1998, tiring of talks that had dragged on for years, Mexico upped the ante in the clash by suing the United States under NAFTA’s dispute resolution process. Now the U.S. has filed a countersuit, and lawyers for the trade representative have unleashed a series of legal maneuvers to further delay the process. U.S. officials are in Mexico City today to detail their case.

Trade and State Department officials closely involved in the matter say that the tactics are designed to ensure that the issue is not resolved while Gore pursues the presidency. The concern is that if the Clinton administration were to allow Mexican trucks on American roads during the 2000 election, the Teamsters would almost certainly not support Gore if he is the Democratic presidential nominee.

“This is a textbook case on how politics subverts trade policy,” said a senior trade official who asked to remain anonymous. “The White House has made it clear it won’t be resolved this year. There’s no question in our minds that we are subverting NAFTA, and we are doing it purely because we don’t want to upset the Teamsters.”

Even top Mexican trade officials, who for years have taken pains to avoid an open rift over the issue, are now letting their anger show. They say that the delay speaks volumes about how committed the administration is to free trade with Mexico and the rest of the hemisphere.

“We believe that reason is on our side and that this has little to do with technical concerns and more to do with politics . . . ,” said Luis de la Calle, undersecretary for international trade negotiations for Mexico’s Ministry of Trade and Industry. “We would like to see, of course, that when two countries have an agreement, that the agreement is respected. And that’s why we’re upset.”

The 1993 NAFTA accord that drew the United States, Mexico and Canada into a trade alliance of unprecedented breadth was to have given trucks from the three countries unrestricted access to North American roads beginning in 1995. Such access would lessen transportation costs significantly for thousands of U.S. businesses that are currently forced to transfer their cargo from Mexican to U.S. trucks at the clogged border. Canadian trucks have enjoyed access to U.S. roads since 1982.

White House officials and the Teamsters said that the delay is about safety, not politics.

“As far as we’re concerned these are unsubstantiated claims that we don’t have any comment on,” Teamsters spokesman Bret Caldwell said. “But we’re going to continue keeping the pressure on this administration and the next to keep the border closed, I guarantee you that. This is a long-term fight for the Teamsters.”

Opposition Grows in Congress

The administration’s action comes amid mounting opposition in Congress as well as in the White House to opening the border to Mexican trucks.

Last month, President Clinton, citing safety concerns, signed a bill that levies severe financial penalties on Mexican shipping companies whose trucks venture more than a short distance inside the United States. And in October, Clinton told labor leaders that he has no intention of lifting the ban on Mexican trucks.

Senior trade officials say they have been told by White House political operatives to delay the implementation of the accord “by any means possible.”

Opening American roads to Mexican trucks could be particularly significant for California. The state’s Department of Transportation said that trade between California and Mexico, 98% of which relies on trucking, is valued at $14 billion annually.

The Teamsters have argued for years that Mexican trucks are unsafe. But in recent months the Mexican government has issued sweeping new regulations requiring drivers with trucking firms based there to undergo drug and alcohol testing and regular roadside inspections. Unlike their U.S. and Canadian counterparts, they are not yet required to keep logbooks or limit the number of hours per day that drivers are behind the wheel. But legislation pending in Mexico would mandate just that.

“It’s safe to say that, if safety were the issue with the Mexicans, this thing would be resolved quickly because Mexico is willing to do the few things that it needs to do to get this matter resolved,” one senior administration official said. “This is all just maneuvering.”

U.S. Alleges Retaliation

On Dec. 10, the United States filed a counterclaim alleging that Mexico has failed to live up to its part of the trade agreement because, in protest of the U.S. delays, it has kept its border closed to U.S. trucks. The filing of the claim is expected to slow the panel’s deliberations and limit the damages that the United States might have to pay Mexico if, as expected, the panel rules against it.

Under terms of the trade accord, disputes between the two countries that cannot be resolved through negotiations are submitted to an independent panel of experts selected and then approved by both sides. A new panel is chosen for each dispute. If the panel rules in favor of the country filing the claim, the country is entitled to damages equal to the amount the panel estimates was lost because of the trade practice. Mexico could be awarded about $1 billion if it prevails.

Only two other such rulings have been issued since the accord was signed, over relatively small trade disputes on Mexican brooms and U.S. dairy products. Damages were not awarded in either case. And never before has the United States filed a counterclaim against Mexico.

U.S. officials meet with their counterparts in Mexico City today. If, as expected, the two sides are unable to come to agreement, the matter goes to the arbitration panel. U.S. officials are expected to argue that under NAFTA, Mexico does not have the right to retaliate by denying U.S. trucks access to its roads.

“We intend to point out to the panel that, whereas we have legitimate safety concerns, Mexico has maintained restrictions on U.S. firms going into the country solely for the intention of retaliation for what Mexico has unilaterally deemed to be violations of NAFTA by the U.S.,” a spokesperson for the U.S. trade representative said. “We’ll argue that unilateral acts are not permitted under NAFTA.”

Delphi Automotive Systems, a General Motors Corp. spinoff that makes auto components for U.S. cars at 53 plants in 20 Mexican cities, is one of the U.S. companies that says delays in opening the border have cost it money.

More than 7 million Delphi components are shipped from the United States to Mexico each year on more than 100 trucks each day. Almost as many come back to this country. Because of restrictions on trucks crossing the border, each truckload has to be unloaded at the border and reloaded onto another truck on the other side.

“We can’t calculate a dollar figure for how much this costs us, but obviously there’s a loss both in time and dollars,” Delphi spokesman Michael Hissam said.

Certification Seen Easing Safety Issue

Trade and State Department officials in the administration say privately that safety concerns can be alleviated adequately by instituting a certification program for Mexican trucks seeking to operate on U.S. highways. And Mexican officials argue that their country’s transportation oversight agency already has a system in place to conduct inspections consistent with U.S. standards. Moreover, Mexican truck drivers have a generally good safety record in the border areas where they have been allowed to drive freely, according to officials in those areas.

“There is no safety argument that’s legitimate. There’s nothing that precludes the U.S. from applying to Mexican truck drivers the strictest standards we want to apply,” one official said. “And the Mexicans have promised to make sure that we can. The administration has taken a strategy of at all costs to delay implementation. This is purely driven by a desire to buy more time.”