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Mexican Trucking Concerns Could Impact NAFTA 2.0 Renegotiation

Mexican trucking issue looms over drive for NAFTA 2.0

Source:  Politico Pro

The controversial issue of Mexican long-haul truckers servicing markets in the United States is not on the official agenda for this week’s NAFTA talks in Ottawa, but it could emerge as a key test of the Trump administration’s ability to strike a deal with America’s southern neighbor.

“Unsafe Mexican trucks should not be allowed to cross the border,” Rep. Lloyd Doggett (D-Texas) said in a letter to U.S. Trade Representative Robert Lighthizer earlier this month. “As part of NAFTA’s much-needed overhaul, consumer safety, especially highway safety, is critical.”

Doggett, a member of the House Ways and Means Trade Subcommittee, is one of several lawmakers who wrote to Lighthizer in the run-up to this week’s NAFTA negotiating round, all delivering the same message: Roll back the long-haul trucking commitment the U.S. made a quarter-century ago in the original agreement.

“I urge you to exempt long-haul trucking from the scope of the cross-border services chapter in the NAFTA upgrade and instead allow Congress to develop standards that will ensure the safety of foreign carriers on American highways,” Brian Higgins (D-N.Y.), also a member of the House Ways and Means Trade Subcommittee, said in a separate letter to Lighthizer.

The original NAFTA agreement, which went into effect in January 1994, gave Mexican trucking access to U.S. border states in 1995 and to all of the U.S. in 2000. But implementation of the latter commitment was repeatedly delayed because of strong opposition in Congress.

After years of litigation and congressional interventions, Mexican long-haul truckers were finally allowed in 2011 to transport goods into the U.S. under a pilot program developed by the Obama administration.

That move prompted Mexico to lift retaliation on more than $2 billion worth of U.S. goods in the long-running dispute, but the AFL-CIO and other labor groups have not relented in their opposition to the provision.

Mike Dolan, legislative director for the International Brotherhood of Teamsters, said he did not expect the issue to be raised during the current round of talks. But with all three sides striving to reach a deal by early December, the U.S. could raise it during one of the four rounds scheduled over the next few months.

A USTR spokeswoman did not immediately reply to a request for the office to outline the Trump administration’s position on the matter, but Dolan said Lighthizer appeared “sympathetic” to the union’s concerns in a recent conversation.

Mexican officials have previously expressed opposition to any changes to the country’s current market access under the deal. A spokesman for Mexican Economy Minister Ildefonso Guajardo also did not immediately reply to a question on the trucking issue.

However, a former Mexican official who spent years working on the issue said any attempt by the U.S. to roll back the provision would further complicate the already difficult task of reaching a deal to revamp NAFTA.

“I think that would be problematic. In fact, what some Mexicans are asking for is even greater access,” said Antonio Ortiz-Mena, a senior adviser at the Albright Stonebridge Group.

Mexican beef producers, for example, would like to ship beef by truck to Canada without having freshness seals on the trucks broken when they cross the U.S. border, he said.

Both Lighthizer and Guajardo arrive in Ottawa Tuesday for the last two days of negotiations in the third round, and for trilateral and bilateral meetings with Canadian Foreign Minister Chrystia Freeland.

Mexican long-haul truckers transport goods primarily to the four U.S. border states — California, Arizona, New Mexico and Texas — and to a lesser extent to states farther away from the border, like Florida, Louisiana and Arkansas, according to a Congressional Research Service report from January 2014.

“Relative to rail and ocean shipping, trucking is comparatively costly for long-distance shipments, even with a driver paid according to Mexican wage scales,” CRS noted. “This is likely why most Mexican trucks in the pilot program are not traveling beyond the border states.”

U.S. border-state politicians and some from states as far away as New Jersey are also citing public-safety concerns as a reason for why the U.S. market opening should be reversed.

“Over the years, the Mexican border has become more dangerous due to drug smuggling and violence,” Reps. Brian Fitzpatrick (R-Pa.) and David Joyce (R-Ohio) said in a letter to Lighthizer.

“Most U.S. domiciled carriers do not venture south,” the letter added, arguing that Mexican trucks “have been and are expected to continue to be the conveyance of choice” for smuggling of contraband and illegal immigration. The lawmakers also added “international terrorists” to that grouping, but Ortiz-Mena said that point was “completely baseless.”

“There has been no evidence whatsoever of any terrorist crossing from Mexico into the U.S.,” he said. “Zero. Zilch. Nada.”

There is undoubtedly a problem with organized crime along the border, but that is a challenge shared by both countries, Ortiz-Mena added.

One solution could be to move truck inspections farther away from the border and take advantage of advanced technology to certify and seal the trucks, as well as trace their movements, he said.

Using NAFTA 2.0 to boost wages in Mexico could be a ‘deal-breaker,’

Using NAFTA 2.0 to boost wages in Mexico could be a ‘deal-breaker,’ ex-Mexican officials warn

From Politico Pro By Megan Cassella

A push to increase wages and tighten labor standards in Mexico — one of the Trump administration’s top priorities in a modernized NAFTA — is likely to be a no-go issue for the Mexican government that has the potential to scuttle the renegotiation, two former Mexican negotiators warned on Tuesday.

“Wages, I think, should be out of any kind of discussions and should be a red line and a deal-breaker,” Francisco de Rosenzweig, a former deputy trade minister for Mexico who led the country’s negotiating team for the Trans-Pacific Partnership, said at an event in Washington hosted by the Wilson Center. The issue, he added, “should not be considered even as a possibility to negotiate.”

Mexico has instituted several labor reforms and improved its legal framework on labor issues since NAFTA was first negotiated, Rosenzweig said, adding that additional changes that Mexican President Enrique Pena Nieto submitted recently are still “on the way.” He described current labor provisions that were written in side agreements as positive developments, and said Mexico would be comfortable moving those provisions into the main text of an updated NAFTA agreement, as the U.S. wants. But going beyond that and tightening those standards would prove more difficult and could endanger the talks, he said.

“We don’t know what other provisions the U.S. may want to submit to Canada and Mexico, so we will take a look,” said Rosenzweig, who is now a partner in the Mexico City branch of the law firm White & Case. “But in the end, it’s about reaching balances,” he said. “It’s not only about the U.S. Congress. It’s about the Mexican [Senate] and the Canadian Parliament, too.”

The United States, in its detailed negotiating objectives, listed bringing those labor provisions into NAFTA’s core text as its top labor-related priority. But it also outlined nine other labor initiatives, including requiring countries to establish rules to enforce labor laws surrounding working conditions and minimum wages. The Trump administration also wants to ensure that NAFTA countries’ labor standards do not affect trade or investment between the parties.

Top U.S. officials have reinforced the point that labor standards in Mexico will be a primary topic of discussion throughout the talks, slated to begin on Wednesday. Back in June, U.S. Trade Representative Robert Lighthizer told members of the Senate Finance Committee that with regard to labor standards, “certainly they will be one of the very first things that we talk to them about.”

In an example of a potential negotiating point where labor standards would figure prominently, POLITICO reported earlier Tuesday that U.S. negotiators would submit a proposal during the first round of talks to make it easier for U.S. produce farmers by region to protest allegations of dumping on Mexico’s part. Many U.S. produce growers complain that the substantially lower labor costs in Mexico help its produce exports undercut the price of produce grown in the U.S.

While it is not known how the Trump administration may propose to achieve its priorities on labor during the talks, the concern is that “apparently Mexico is like the bad guy in the arena because we have lower labor costs,” said Luz Maria De La Mora Sanchez, a former official at Mexico’s Foreign Affairs Ministry who was part of the original team that negotiated NAFTA in the early 1990s.

“Wages in Mexico are lower than in the U.S. That’s a fact,” she said at the Wilson Center event. “The fact that that exists doesn’t mean we have an overt trade advantage.”

Mexico has to work hard to close that gap, she said, but doing so will require education, innovation, improvements in productivity — and not new trade agreements.

“My concern with respect to labor is that the U.S. comes up with a proposal that really tries to intervene in minimum wages and labor markets, which cannot be solved through a trade negotiation,” she said. “We have to be very careful on not offering solutions that may end up not getting us anywhere.”