NAFTA Panel Rejects U.S. Constraints on Mexico Trucks

The United States on Tuesday lost one of the most contentious disputes under the historic North American Free Trade Agreement when a special panel found that Mexican trucks should no longer be denied unfettered access to U.S. roads.

The decision immediately forces the Bush administration to somehow honor its free trade beliefs while ensuring that Mexico’s trucks and lax regulations aren’t allowed to jeopardize U.S. highway safety.

The Mexican government Tuesday repeated a long-standing demand that the U.S. drop restrictions on its trucks. But Mexican officials were restrained in their comments 10 days in advance of President Bush’s scheduled trip to Mexico to meet with President Vicente Fox.

Under the complex rules of the trade agreement, the Bush administration has two options for complying with the unanimous decision of the five-member arbitration panel:

* It can approve access for Mexican trucking companies that meet U.S. safety standards on a case-by-case basis, thus acquiescing to the Mexican government.

* It can buy its way out by negotiating a compensation agreement with Mexico. That would allow the U.S. to maintain a wholesale ban imposed by then-President Clinton in an effort to get Mexico to adopt strict safety standards. The ban also served as a political reward to labor unions supportive of the Democrats.

The issue is central to NAFTA because at least 90% of the booming U.S.-Mexico trade moves by road.

A loose coalition of the Teamsters union, trade critics and members of Congress from both parties is urging the administration to pay the money and keep the trucks out. The U.S. trucking industry, however, is in favor of allowing Mexican trucks to operate here, provided they comply with safety rules.

Bush promised throughout his campaign for the presidency that closer cooperation with Mexico would be one of the hallmarks of his administration. In interviews before the election, he said he felt comfortable with granting approval for Mexican trucks to circulate freely.

But Tuesday, U.S. trade officials chose their words carefully.

“The president has made it clear that he believes NAFTA should be implemented, and we intend to do that,” said a trade official, who asked not to be identified. “I’d like to stress as we move forward that the U.S. will not compromise highway safety in any way.”

A senior Republican lawmaker was harshly critical of the trade panel’s decision. “I have very serious concerns,” said Rep. Frank R. Wolf (R-Va.), a longtime advocate of stronger U.S. truck safety rules. Mexico “has no limits on how long drivers can stay behind the wheel, no inspections, and no system in place to guarantee that these trucks are safe,” he said.

Originally, NAFTA envisioned that Mexican trucks would enjoy open access to U.S. roads by Jan. 1, 1995, and U.S. trucks were to have comparable access to Mexican highways. The trade deal stipulated that the United States had a right to apply its safety, environmental and insurance standards to trucks from Mexico.

But the effective date has been repeatedly delayed by the U.S., and U.S. and Mexican trucks are now limited to narrow commercial zones in each other’s country. Mexican trucks, with a few exceptions, are restricted to within 15 miles of the border in four states: California, Arizona, New Mexico and Texas. Canadian trucks, meanwhile, long subject to strict regulations, have moved freely in this country since 1982.

Mexico, which estimated its losses at $2 billion because of the policy, filed a complaint under the provisions of NAFTA, and last February a special panel of two Americans, two Mexicans and a chairperson from Britain was convened to consider the case.

Critics’ arguments have been bolstered by warnings about Mexican trucks from the Transportation Department’s inspector general’s office. As an internal watchdog, the office has strong credibility with Congress on matters ranging from air traffic computers to rest periods for truckers.

The average age of Mexico’s trucking fleet is 16 years, compared with 5 years for U.S. trucks. Supporters of Mexico argue that the fleet would modernize rapidly if it could participate fully in the surging import-export market.

In a report prepared for the new Congress, the inspector general’s office found that there continue to be “significant shortfalls” in U.S. inspections of Mexican trucks now permitted to operate in border areas. Last year 35% of Mexican trucks inspected by U.S. officials were declared unsafe and immediately idled. The comparable statistic for U.S. trucks--which also have significant safety problems--was 24%.

But the inspector general has said that some Mexican companies simply ignore the current restrictions and send trucks outside the border regions. In 1998, an investigation by the office found 52 Mexican companies operating without approval outside the border states.

“Bush has got to keep the border closed and pay the sanctions,” said Lori Wallach, a lawyer with Public Citizen, the advocacy group founded by Ralph Nader. “When he was campaigning, he put heat on Clinton for not opening the border. Now he’s president, and it will be his fault when the inevitable deadly crashes happen.”

But U.S. businesses complain that the present system burdens them with excessive delays and costs by forcing Mexican trucks to transfer their cargo to U.S. trucks at the heavily congested border.

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Times staff writer James F. Smith in Mexico City contributed to this report.