USMCA Trade Bill Addresses Trucking Competition

USMCA Trade Bill Addresses Trucking Competition

December 19, 2019  | Jeff Davis

This week, the House of Representatives passed the bill implementing the new U.S.-Mexico-Canada trade agreement (USMCA), which repeals and replaces the 1993 North American Free Trade Agreement (NAFTA). The text of the implementing bill (H.R. 5430) is here and the full text of the USMCA agreement and all its annexes and side letters is here. The House passed the bill by a bipartisan vote of 385 to 41.

Subtitle C of title III of H.R. 5430 establishes a new process to deal with complaints that competition from Mexican trucking interests is hurting U.S. trucking interests. Any “interested party” (defined as a U.S. trucking company, trucking trade association, or labor union, or the Mexican government or Mexican citizens), or the President or the House Ways and Means Committee or Senate Finance Committee, can file a complaint with the new International Trade Commission, which shall then investigate to determine if Mexican competition “is causing or threatens to cause material harm to a United States long-haul trucking services industry.”

Within 120 days of commencing an investigation, the Commission shall make a determination, and if the determination is in the affirmative, the Commission shall “recommend the action that is necessary to address the material harm or threat of material harm found.” Eligible types of relief include the denial or revocation of U.S. trucking permits to Mexican trucking companies, or a cap on the total number of such permits.

The Commission would then submit a report to the President, who then shall order the Secretary of Transportation to provide the specified relief, and the Secretary shall carry out such relief – except that the President is not required to provide relief if he determines that relief is not in the national economic interest of the U.S. or would harm national security.

Section 327 of the bill also requires USDOT to carry out a survey of all existing permits given to Mexican trucking companies and all pending applications and report back to Congress and the Administration.

The Mexican truck issue has a long and torturous history. The 1993 NAFTA agreement required the U.S. to allow Mexican and Canadian trucking companies to operate throughout the U.S. (not just within the border zone within 25 miles of the border). The U.S. dragged its feet on implementing this provision, and Mexico filed a complaint with an international arbitration panel, which was decided in Mexico’s favor in February 2001. Congress then quickly enacted, in the fiscal 2002 DOT Appropriations Act, a series of requirements that had to be met before Mexican trucks were given access to the U.S. (see sec. 350 of P.L. 107-87).

Fulfilling those requirements took until February 2007, when the Bush Administration started a pilot program to allow Mexican trucks access to the U.S. on a trial basis. Congress then promptly de-funded this program (see sec. 136 of Division K of P.L. 110-161). After more objections, which went unheard by the U.S. government, Mexico issued retaliatory tariffs targeted at the states of prominent Members of Congress who opposed Mexican truck access – a 45 percent tariff on fresh grapes to mess with California, and Rep. Peter DeFazio (D-OR) claimed that tariffs of 20 percent on Christmas trees, pears, onions and cherries were targeting his part of Oregon.

President Obama then negotiated a new deal with Mexico on truck access, which was announced in March 2011 and which, when fully implemented, led Mexico to withdraw the retaliatory tariffs. A new pilot program was restored, and then, in 2015, FMCSA filed its formal report summarizing the results of the pilot program and announcing a permanent access program. The Teamsters and OOIDA filed a lawsuit to stop the program but their suit was bounced by the Ninth Circuit in June 2017.

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