The North American Free Trade Agreement (NAFTA), implemented in 1994, facilitated trade between the United States, Mexico, and Canada. Among its provisions was the allowance for Mexican trucks to operate within the United States—a measure that sparked decades of political and safety debate.
NAFTA liberalized movement of goods across North America. The deal also affected how goods were carried by trucks between the three countries. The terms of the deal allowed Mexican truck drivers to cross the border and transport goods deep within the US.
How NAFTA Trade Deal Had Affected Mexican Trucks?
While NAFTA boosted trade between the U.S. and Mexico, the provision allowing Mexican trucks to operate inside the U.S. became a contentious issue. U.S. trucking companies raised concerns about job displacement and differing safety standards.
Nearly two-thirds of trade between the nations goes through the road that is mostly carried by trucking companies.
Under the terms of the deal, Mexican truckers were allowed access to highways in the US. But trucking companies in the country opposed the move since this would mean less business for local companies. There were also concerns about poor safety records of Mexican trucks.
As a result, Mexican trucking companies were forced to hand over the goods to American transport companies at the border. Despite being in violation of the NAFTA trade deal, this remained the practice for about over a decade after the implementation of the deal.
Limited Access Granted to Mexican Trucks
In 2007, the U.S. government began a pilot program granting limited highway access to certified Mexican carriers. However, political and industry opposition led Congress to suspend funding in 2014. Mexico responded with tariffs on U.S. goods.
However, the move was opposed on the grounds that Mexican trucks were not safe, and that it would hurt the job market for the US truck drivers.
Bowing to the pressures by the US trucking companies, the Congress did not fund the program in 2014 due to which Mexican trucks could not transport goods inside the border area. This was perceived in violation of the NAFTA deal due to which Mexico decided to retaliate by imposing $6 billion on US goods.
To reduce trade tension between the neighboring countries, in 2015 the US started to permit a few licensed Mexican trucks to transport goods in the US. The trucking companies were allowed to transport goods deep within the country.
Present Status about Mexican Trucks Under the NAFTA
As of today, only 41 Mexican truck companies are granted access to transport goods within the US under the NAFTA deal. The largest Mexico-based carrier company is Trans-Mex Inc. The company operates about 188 vehicles including long-haul trucks and 255 drivers.
Transportes Olympic De Mexico is another large trucking company based in Mexico allowed under the program. The company owns 78 vehicles that are driven by 78 drivers.
The third largest Mexico-based company is GCC Transporte SA that has 50 vehicles driven by 39 drivers.
There are twenty-two other carriers that have less than 3 vehicles that are allowed to transfer goods under the program.
Changes for Mexican Trucks Under the USMCA
The US, Mexico, and Canada had signed an agreement called the US-Mexico-Canada (USMCA) trade deal in late 2018. Also known as NAFTA 2.0, the trilateral trade agreement is basically an updated version of NAFTA.
The new trade deal that is set to replace NAFTA on Jan 1, 2020, will give greater control to the US over cross border trucking activities.
Transport Cross Border Loads
The new trade agreement maintains the terms of the old deal allowing Mexico-based trucking companies to carry only cross-border loads. Mexican trucking companies are allowed to carry only goods that originate in one country and end in other words. In other words, they cannot carry goods that operate between two locations in the US.
Limit the Number of Mexico Truck Companies
Under the latest trade deal, an annex gives the US to put a moratorium on granting authority to new Mexican based carriers. A cap will be placed on the number of Mexico-based carriers. The trucking companies that are allowed to transport goods will be reduced as per the new deal. The US has the authority to limit Mexico-based carriers in the country.
Zero Tariff Requirements Increased
An important term of the new deal is that the trucks or cars imported to the US must have 75 percent of the components manufactured in Mexico, Canada, or the US. Otherwise, a tariff is imposed on the transfer of vehicles. Under the old NAFTA deal, the limit was 62.5 percent for zero tariff.
Limit to Movement of Mexico Trucks
Mexican truck companies are granted limited authority to move long haul goods. They must operate in commercialization zones within the US. The truck companies can travel deep into the US, move the loads, and then leave the country immediately.
The US has the power to determine the maximum number of Mexican trucks allowed in the country based on the threat or harm of material nature to US trucking companies, drivers, and operators.
Conclusion
The updated NAFTA deal that was agreed after lengthy negotiation, tariffs, and lawsuits has put the needs of America first. The American government had insisted on protecting the livelihood of the US truck drivers and ensuring the safety of Americans on the highway.
Trucking operations had stalled for much of the past two decades and a half after the signing of the NAFTA deal. The previous presidential directives had prevented implementation of the rules regarding Mexican trucks to protect the local trucking industry.
The USMCA was ratified and took effect on July 1, 2020. While it reaffirms limitations on Mexican trucking operations, questions about long-term safety and economic impact continue. The U.S. maintains the right to cap or revoke access based on harm to its domestic industry.
Critics of cross-border trucking argue that Mexican safety regulations are less stringent than those in the U.S. Concerns include insufficient driver vetting, lower maintenance standards, and differences in enforcement. While authorized Mexican carriers must meet U.S. Department of Transportation safety standards, public skepticism remains. There is a fear that the Mexican trucks could compromise safety rules resulting in an increased incidence of truck accidents on the highway.
If you or a loved one has been injured in a highway truck accident involving a cross-border carrier, speak with an experienced truck accident attorney. These cases often involve complex federal and international regulations, and legal guidance can be crucial in recovering full compensation.
