Pig Farmers Set to Gain from Mexico Trucking Deal

by TJ on January 22, 2011

The North American Free Trade Association (NAFTA) has long held the hope that the southern border with Mexico would eventually be treated like the northern border with Canada. Canadian truckers are free to enter the US with their loads and return back home fully-laden; in contrast Mexican truckers must stay within 25 miles of the US/Mexico border.

There was an original deal which allowed Mexican truckers to operate in the United States, however this was abolished by the incumbent Obama administration.  Mexico retaliated with a strong series of tariffs, which jacked the price of American imports on the list up from anywhere between 5% and 25%.  US products from toilet paper, wine, cheese and pork have been affected and the tariffs are thought to have cost the US economy and companies billions of dollars.

That is all set to change after a discussion paper was released by the US Department of Transport, which tentatively outlined what a new cross border trucking deal could look like.

Truckers don’t hold with it because it will see cheap Mexican trucking carriers taking business away from them, while at the same time there are serious environmental and safety issues.  One example: a used semi-trailer can be sourced for around 1/3rd the cost in Mexico as it will be found in the US.  Another for instance, sourcing sulfur-free diesel is extremely diofficult in Mexico, with only the big cities having supplies and the track record of many Mexican operators is nowhere near as good as that which has been built up by US operators.

On the other hand, US manufacturers and exporters are expecting a huge windfall.  Pork importers into Mexico expect to see the reversal in the shrinkage of their market share there because the tariffs are making their products too expensive. Wine producers who have seen an expanding market in Mexico for US wine be almost destroyed by the tariff system are also encouraged, because as part of any cross border trucking deal, there will be a removal of the tariff system.

NAFTA obviously wants this to happen too as part of its vision for a free trade bloc encompassing the entire North American continent.

Currently, there is a complicated trailer transfer system in use which allows for cargoes to and from Mexico to be handled by transfer centers.  Typically, each trailer transfer requires three tractor units – one from Mexico, one to move around the transfer center and finally, yet another to haul the load off to its final US destination.  Clearly, this is an inefficient way of doing business and the manufacturing industry has some very strong points, but it remains to be seen whether the US trucking industry is able to counter financial and commercial necessity with road safety and the protection of American jobs at home.

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