Fifteen years after it was signed, the North American Free Trade Agreement has fundamentally changed our economic relationship with Mexico, and even its harshest critics would have to admit that we can't afford to simply roll back the treaty and re-erect economic barriers with our second largest trading partner. Yet NAFTA is still a potent political hot-button issue as evidenced in the last presidential election where calls to undo the treaty were heard often.
When political priorities trump practical ones, we end up with symbolic gestures from legislators that do nothing to alter an unalterable situation and have no purpose beyond creating political cover. Unfortunately, some group often ends up being injured as the price to be paid for those grand political symbolic gestures. And in the latest anti-NAFTA posturing, that group is the trucking industry.
In 2007, a pilot program was launched allowing a small number of Mexican and U.S. carriers to freely operate within their neighboring countries. Long overdue, it came 12 years after NAFTA ratified the concept of full access to Mexican and U.S. highways to all trucks, and was limited to 100 carriers from each country. Only 27 Mexican fleets with 107 trucks and 10 from the U.S. with 55 trucks chose to participate, but even that limited interest fanned hysteria about the safety threat of Mexican trucks on our roads and wages lost to lower cost drivers from south of the border.
Looking for a NAFTA issue they could use to prove their opposition to the agreement but one that wouldn't really disrupt the $230 billion in trade carried across the border by truck, a group of congressmen attempted to cut funding for the demonstration in 2007. That attempt failed, but with unemployment now soaring, anything even remotely threatening domestic jobs has become a political third rail. And so last month Congress passed an appropriations bill with similar language, and the President signed it into law, effectively killing the cross-border trucking experiment.
If the program involves so few trucks, what's the big deal? In one word — retaliation.
When it comes to trade, countries have a poor history of biting off their noses to spite their faces. Ever hear of the “chicken tax”? That's a 25% duty we impose on commercial vans imported from Europe in retaliation for a ban they instituted on U.S. chicken imports. There are hundreds, if not thousands, of similar examples of retaliatory trade moves that harm both parties but satisfy some misguided sense of national justice.
In the case of cross-border trucking, we agreed to full access in 1994, but have found one excuse after another to avoid living up to our end of the bargain. That procrastination has rankled many in Mexico who feel NAFTA has opened their borders to unfair competition with much larger and better funded American companies. This latest move is bound to give Mexican politicians with a protectionist bent ammunition to further disrupt truck movements across our common border. In fact, Mexico's ambassador to the U.S. has already been quoted as saying his country will consider all options “including retaliation” in responding to the end of the demonstration project.
While it may not have been the intention, this symbolic stand against NAFTA could well impact far more than 163 trucks.