NORTH America's TRANSPORTATION NETWORK TO FACE
The North American Free Trade Agreement (NAFTA) was
signed on December 17, 1992. It is a trilateral economic agreement
among Canada, Mexico, and the United States. The objective of NAFTA
is to phase out barriers to trade in goods and services in North
America, eliminate barriers to investment, and strengthen the protection
of intellectual property rights. NAFTA also includes a number of
Transportation provisions that establishes a schedule for liberalizing
certain restrictions on the provision of bus and truck services.
Prior to NAFTA, some of the transportation restrictions
1. Mexican trucks were limited to operations in the
commercial zones along the border with the United States;
2. Mexico did not permit foreign investment in transportation companies
based in Mexico;
3. United State trucks were not permitted to operate in Mexico;
4. Although the United States permits foreign investment, it limits
Mexicans to a non-controlling interest in truck and bus companies
based in the United States.
The Mexican restrictions were the result of a nationalistic,
protection of Mexico. The U.S. restrictions were the result of a
moratorium imposed by the U.S. Congress in 1982. This moratorium
prohibited Mexican and Canadian motor carriers from operating in
the United States beyond a limited zone along the U.S.-Mexico border.
(Bus Regulatory Reform Act of 1982 Public Law 97-261, 96 Stat. 1103).
However, the moratorium with respect to Canada was lifted shortly
after implementation on the basis of a bilateral agreement that
gave U.S. carriers access to Canadian markets and vice versa.
The moratorium had the effect of restricting the transportation
between Mexico and the U.S. However, with the implementation of
NAFTA, the United States agreed to modify the moratorium by ratifying
NAFTA Annex 1, which provided deadlines in regards to trucking access
and investment on truck companies such as:
* Mexican and U.S. trucking companies would have full
access to and from each country's border by December 18, 1995.
* Mexican companies would be permitted to provide
cross-border scheduled bus services by January 1, 1997; and
* Mexican and U.S. truckers would have full access
to each other's countries by January 1, 2000,
* In December 1995, Mexico was to allow Canadian and
U.S. investment, of up to 49 percent, in Mexican carriers that transport
cargo internationally. In 2001, investment of up to 51 percent will
be permitted and in 2004, Mexico will permit 100 percent foreign
investment in truck and bus companies.
* By December 1995, the U.S. was to allow Mexican
carriers to establish Mexican-owned or controlled subsidiaries in
the U.S. to transport cargo internationally.
In 1995, the U.S. decided not to abide by the implementation
of the investment and access provisions to permit Mexican trucks
to operate in the U.S. border states, which were scheduled to become
effective on December 18, 1995. Because the implementation was postponed,
Mexico sought to find a solution to the trucking issues by formal
consultations with the U.S. government.
These consultations did not resolve the issues between
Mexico and the U.S. As such, the Mexican government requested the
establishment of an arbitration panel, as provided by the NAFTA
dispute resolution mechanism.
This panel was to decide whether the U.S. was in breach
of Articles 1202 (national treatment for cross-border services)
and/or 1203 (most-favored-nation treatment for cross-border services)
of NAFTA by failing to lift its moratorium on the processing of
applications by Mexican-owned trucking firms for authority to operate
in the U.S. border states.
Similarly, the Panel was to decide whether the U.S.
breached Articles 1102 (national treatment) and/or 1103 (most-favored-nation
treatment) by refusing to permit Mexican investment in companies
in the U.S. that provide transportation of international cargo.
The panel was finally convened on January 4, 2000.
This five-member arbitration panel comprised of two U.S. and two
Mexican panelists, and was chaired by a British jurist. The panel
unanimously found on February 6, 2001 that the U.S. decision to
avoid implementation of NAFTA provisions was a violation of its
national treatment and most favored nation treatment obligations
for services and investment.
The 2000 Presidential campaign of President Bush stated
that the United States should honor its NAFTA commitments. The preliminary
ruling of the Panel was issued on November of 2000, days before
U.S. President Bush meeting with Mexico's President Vicente Fox.
During his visit, President Bush guaranteed to President Fox that
the United States would fulfill the opening of the border to international
trucking and cross-border regular route bus services.
On February 6, 2001, the panel set up under the North
American Free Trade Agreement on the land transportation case issued
its final report in favor of Mexico. Mexico was pleased with the
panel's ruling, because it calls for the U.S. to take steps to bring
its practices with respect to cross-border trucking services and
investment into compliance with its obligations under NAFTA.
President Bush's decision to implement NAFTA trucking
provisions and his willingness to comply with the panel's ruling,
showed that the U.S. Government was willing to fully comply with
the final report of the panel. Based on that decision, on June 5,
2001, the U.S. President allowed the motor carriers domiciled in
the United States that were owned or controlled by persons of Mexico,
to obtain operating authority to provide cross-border truck services.
However, at that time, the moratorium on the issuance of certificates
or permits to Mexican-domiciled motor carriers for the provision
of truck or bus services between points in the United States remained
It was not until November 27, 2002, in an effort to
fully comply with the panel decision and to revert the moratorium
imposed in 1982., when the U.S. President authorized the Department
of Transportation to act on applications submitted by motor carriers
domiciled in Mexico to obtain operating authority to provide cross-border
scheduled bus services and cross-border truck services.
The delay in opening the border to transportation
services has deprived the entire North America region of important
benefits and has imposed higher costs for businesses and consumers
alike. The current Mexican border trucking system is inefficient.
It requires transfers of loads from long-haul trucks to older drayage
vehicles for short hauls in the 20-mile commercial zones on both
sides of the border and then back to long-haul trucks again instead
of having a modern long-haul fleet continuously on the road.
An open border to land transportation will increase
the efficiency of North America's transportation network as it will
be possible to directly deliver cargo from one point to another,
making the North America region more competitive vis-à-vis
other markets. Opening the U.S. border to Mexican trucking companies
not only represents an opportunity to Mexico, it also means that
the U.S. and Canada will be able to reap the benefits of that geographical
Adrian F. Dominguez
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