Bloomberg News

Mexico to Lift Tariffs as U.S. Approves Trucking Permit

October 14, 2011

(Adds Economy Ministry comment in the third paragraph.)

Oct. 14 (Bloomberg) -- Mexico said it will lift tariffs on 99 U.S. goods following the approval of the first cross-border permit for a Mexican trucking company under an agreement reached in March.

Transportes Olympic, based in Monterrey, Mexico, received the permit today from the Federal Motor Carrier Safety Administration, Mexico’s Economy Ministry said today in an e- mailed statement. The trucking company also was the first participant in a similar program in 2007 that the U.S. later canceled.

“Mexico will proceed to lift, within five business days, the tariffs on 99 U.S. products that our country was forced to impose as retaliation after the cancellation in 2009 of the previous program,” the Economy Ministry said.

The permit program resolves a conflict that dates back to December 1995 when the U.S. cited safety concerns to block North American Free Trade Agreement rules allowing Mexican trucks to cross beyond a 25-mile border zone. Since NAFTA took effect in 1994, total trade between the two countries has grown more than fourfold to $384 billion last year, according to Mexico’s statistics agency.

The U.S. Department of Transportation granted the permit after an “exhaustive review” of the company’s operation in Mexico to make sure it meets U.S. standards, according to an e- mail statement from the department.

Mexico had lifted 50 percent of tariffs affecting $2.4 billion of goods after the U.S. reached the agreement to implement the program and now will eliminate the remaining half, according to the department. The tariffs applied to apples, grapes, pears, potatoes, pork and other products, the department said.

Big Win

“This is a big win for American farmers and consumers, who will no longer have to struggle with onerous tariffs imposed by Mexico,” Transportation Secretary Ray LaHood said in the statement.

The department said yesterday it delayed awarding a cross- border trucking permit to a Mexican trucking company called Grupo Behr de Baja California, which passed a preliminary inspection, to review safety objections from industry groups.

Under the program, Mexican trucks can take cargo to a U.S. city and pick up a load and return to Mexico, similar to rules on Canadian trucks. Mexican trucks cannot deliver cargo between U.S. cities. U.S. trucks will be allowed to circulate in Mexico under the same guidelines.

Safety Standards

Mexican trucks must comply with all Federal Motor Vehicle Safety Standards and have monitoring systems to track hours on the road, according to rules announced in July. Truck drivers must take drug tests that are analyzed in the U.S., hand over complete driving records and prove their English-language skills.

“The possibility to provide door-to-door delivery service for international cargo will contribute to achieving a more modern, agile and efficient border,” the Economy Ministry said. “This will bring benefits to producers, exporters, consumers and transportation users, which will result in a more competitive North America.”

Because of the current trucking limitations, truckers drop trailers at the border before crossing. Older rigs, often called transfers, pick them up to cross and leave them for a long-haul truck waiting on the other side.

A previous attempt to resolve the problem failed after the U.S. canceled a cross-border trucking certification program in March 2009. Only 157 Mexican trucks took part in that pilot program.

--With assistance from Crayton Harrison in Mexico City. Editor: Jonathan Roeder

To contact the reporter on this story: Thomas Black in Monterrey at tblack@bloomberg.net

To contact the editor responsible for this story: Jose Enrique Arrioja at jarrioja@bloomberg.net


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