c o l u m n

John Bendel • Senior Editor
On Free Trade

Current Of Discontent

Fleets in Mexico still miffed at NAFTA stalls.

The North American Free Trade Agreement (NAFTA) was to have opened the Mexican-U.S. boundary to cross-border trucking in 1995. The Mexicans weren’t happy when President Clinton unilaterally suspended that phase of the treaty for domestic political purposes. In two years, they haven’t gotten any happier.
That was the distinct current of discontent that ran through the 7th Annual North American Trucking Conference in Washington DC in November. One after another, Mexican presenters referred to the unimplemented portion of the treaty, which they clearly — and quite rightly — find offensive.
For example, Luis de la Calle, Director, Office of NAFTA in the Mexican Embassy, pointed out NAFTA is about the economic well-being of an entire continent, not short-term trucking concerns. He and the other speakers were too polite to point out that promises made should be kept — especially the ones made in writing and ratified by Congress.
But sooner or later, the border will open. That’s why the North American Transportation Alliance sponsors this annual conference. And when the opening finally comes, Mexican carriers are in for a sobering lesson in U.S. liability law, at least according to Gary Doyle, Project Legal Director with the National Law Center for American Free Trade in Tucson.
Doyle said Mexican regulations require fleets to carry the equivalent of $125,000 in motor vehicle liability insurance. In the U.S., the requirement is $750,000. Even that can run out real fast, said Doyle, “if your truck runs over a car.”
Mexican carriers with U.S. terminals could find trouble they never anticipated if one of their trucks happens to hit an American car back in Mexico. Injured Americans, he explained, would probably bring suit against the carrier not in Mexico, but in the U.S., in a state where the carrier has facilities.
Would that be permissible under NAFTA? Good question. But while lawyers tried to sort it out, the suits would go forward and the carrier would find itself in the dark forest of U.S. liability law.
Beyond liability concerns was the more basic worry about simple security, highlighted by a frightening and well-publicized rise in crime throughout Mexico, including freight and vehicle thefts. At the conference, Gail Toth, executive director of the Transportation Loss Prevention & Security Council, reported growing thievery on both sides of the border.
In the U.S., crime crews of a dozen or fewer members, often veterans of the drug trade, turn to cargo theft, where they make just as much money at far less risk for prison time, said Toth. The freight of choice these days: computers, computer components and high-end clothing. Meanwhile, Mexican cargo insurers have experienced huge losses, according to Salvador Vargas, director, Property Loss Control and Claims with one such company, J&H Marsh & McLennan.
Yet the severity of the problem seems to depend on who’s describing it. One private fleet operator serving more than a dozen Mexican manufacturing sites said that while his fleet suffers occasional nuisance losses of glad-hands and tires in Mexico, cargo theft is not a major problem.
A possible explanation came from a U.S. insurance executive who said there are vast differences among fleets in the way they do or do not implement security measures. Perhaps most important of these is who they hire.
When will the border finally open for carriers? For the attendees of this conference, Mexican, Canadian and American alike, it can’t be soon enough.
But regardless of when that is, it was clear in Washington there are enough incompatibilities along the southern border to keep trucks lined up for years to come. Still, the rest of the NAFTA treaty is in effect and the resulting dramatic rise in traffic across the border is the real, often overlooked, news.
Perhaps the most telling revelation at the conference was that, at one crossing point where truck drivers are forced to wait for hours on end, authorities may be forced to install port-a-potties.