In the North American Free Trade Agreement ("NAFTA"), the United States and Mexico agreed to permit, beginning on December 18, 1995, Mexican and U.S. truckers engaged in cross-border trucking access to, respectively, the U.S. and Mexican border states. Although buried in Annex I of NAFTA, the U.S. and Mexican commitments to open the border to cross-border trucking were viewed as an important step towards facilitating increased trade between Mexico and the United States. Despite this NAFTA commitment, the United States Secretary of Transportation, Federico Peña, announced on December 18, 1995, that the United States was postponing the opening of U.S. border states to Mexican truckers. Mexico responded to this announcement by requesting consultations under NAFTA, the first step towards impaneling a NAFTA Chapter Twenty arbitration panel.
Prior to NAFTA's implementation, the United States and Mexico limited the provision of cross-border trucking services by restricting the access of Mexican and U.S. trucks to, respectively, the U.S. and Mexican highway systems. Mexico, in theory, permitted U.S. trucks to enter, pursuant to the Ruiz Cortines Decree of 1955, twenty-five miles into Mexican territory. Nonetheless, in practice, U.S. truckers often found it difficult to gain the twenty-five-mile access. As a result, U.S. truckers would haul freight to the U.S. border with Mexico and unload the cargo; Mexican truckers would then load the cargo onto Mexican trucks for transportation into Mexico.
The United States also restricted the access of Mexican trucks to the U.S. highway system. In 1982 the United States declared a moratorium on the issuance by the Interstate Commerce Commission of the permits that trucks must obtain to provide trucking services in the United States. Subsequently, rules were tightened to restrict Mexican trucks to so-called Commercial Zones located along the border in U.S. border states.
NAFTA was designed to significantly change Mexican and U.S. restrictions on the cross-border provision of truck services. As set forth in Table I, pursuant to NAFTA, U.S. and Mexican truckers are supposed to have the right eventually to provide international cross-border trucking services, but not domestic services, throughout North America.
TABLE 1: NAFTA Phase-Out of Restrictions on Cross-Border Trucking Services* Country Current Access To Access To Regulation Border States All States Mexico Twenty-five December 18, January 1, miles along 1995 2000 the border United Access for December 18, January 1, States Mexicans to 1995 2000 Commercial Zones *Sources: NAFTA Annex I-M-68-71 and Annex I-U-18-20
NAFTA liberalizes cross-border trucking services in a two-step process. Pursuant to the first step, beginning on December 18, 1995, U.S. and Mexican truckers were supposed to have the right to provide cross-border trucking services to, respectively, Mexico's border states of Baja California, Chihuahua, Coahuila, Nuevo León, and Ta-maulipas, and the United States border states of Arizona, California, New Mexico and Texas. Pursuant to the second step, beginning in 2000, U.S. and Mexican trucks are supposed to have the right to provide cross-border trucking services to, respectively, anywhere in the territory of Mexico and the United States.
The Clinton Administration justified its announcement not to permit Mexican truckers access to U.S. border states by invoking the "safety and security of U.S. citizens," specifically that Mexican trucks posed safety hazards on U.S. roads and the probability that Mexican trucks would be used to transport drugs into the U.S. market. Somewhat confusing the situation, the Interstate Commerce Commission published regulations in the Federal Register on December 13, 1995, establishing how Mexican trucks could apply for operating authority. Further confusing matters were reports, subsequently denied by the Mexican Government, that Mexico had acquiesced in a delay in the mutual opening of the border states.
Mexico immediately responded to Secretary Peña's announcement. On December 18, 1995, the Secretary of Commerce and Industrial Development sent a letter to the U.S. Trade Representative, requesting consultations. Canada's Minister for International Trade, Roy MacLaren, also sent a letter to Ambassador Kantor on January 8, 1996, informing the United States of Canada's intent to join the consultations. Pursuant to the Mexican request for consultations, representatives of the United States, Canada and Mexico met in Washington on January 19, 1996, but did not resolve the dispute.
If future informal consultations fail to resolve the dispute, any of the NAFTA countries may request that the Free Trade Commission, comprised of cabinet-level representatives of each NAFTA country, attempt to settle the dispute. If Mexico petitions the Free Trade Commission, Mexico must describe the measure -- the U.S. refusal to allow Mexican truckers to apply for operating authority -- and indicate the provisions of NAFTA that Mexico considers relevant, in this case, the U.S. obligation to open its border states to cross-border trucking and the concept of national treatment in Chapter Twelve. If Mexico proceeds to this second step, the Free Trade Commission must then convene, normally within ten days of the request, to try to settle the dispute in a timely fashion.
Assuming that the dispute is not resolved by either informal consultations or the Free Trade Commission, any of the NAFTA countries may request the formation of a Chapter Twenty arbitration panel, which is chosen from a roster of panelists that the NAFTA countries have established. A panel formed in this manner must normally submit to the Free Trade Commission an initial unpublished report within ninety days after the last panelist is chosen. Subsequently, the panel issues and publishes a final report containing its conclusions regarding the controversy. If the panel is formed and concludes that the United States has violated NAFTA, the resolution of the dispute would normally be the non-implementation or removal of the non-conforming measure, which in this case would mean that the United States would be required to accept applications from Mexican truckers for the authority to enter U.S. border states. Nonetheless, if the United States loses, NAFTA does not require the United States to allow Mexican truckers to apply for operating licenses. Yet, if the United States were to refuse Mexican truckers the right to apply for operating licenses, Mexico would have the right to suspend a NAFTA benefit of "equivalent effect."
