Mexico & Nafta - 15 June 2004
TRANSPORT: US forced to back down on lorries
The US Supreme Court ruled on 7 June that the US government did not need to carry out a more thorough environmental impact assessment of the effect Mexican lorries would have on US air quality when they use US roads. The court decision opens the way for Mexican lorries to use US roads. The Supreme Court decision was based on the narrow premise that federal agencies could not be used to delay a presidential decision merely on procedural grounds.
The unanimous decision by the supreme court overturned a decision by a San Francisco appeals court in January 2003. The appeals court had upheld the claim by environmentalists and others that the US Department of Transport should conduct a widespread and thorough survey of the effect Mexican lorries would have on air quality in the US before obeying President George Bush's decision of November 2002 to allow Mexican lorries to use US roads. The US Transport Secretary, Norman Mineta, said that the administration would now move forward on implementing the commitment, enshrined in the Nafta treaty but ignored by the US, to allow Mexican lorries to use US roads freely. A Nafta disputes settlement panel had ruled in 2001 that the US was not complying with its obligations under the treaty.
Since 1982 Mexican lorries have only been allowed to deliver goods 32km (20 miles) inside the US. Onward shipment required the use of a US lorry. The Supreme Court decision is, thus, a blow to the influential Teamsters Union, which dominates the US trucking industry. The decision is a boost to non-union haulage firms, such as Celadon, which will now be able to use cheaper Mexican lorries to deliver goods right across the US. US lorry drivers earn, on average, US$0.34 per mile (US$18.70 per hour); Mexican drivers get US$0.14 per mile.
The Supreme Court decision still means that Mexican haulage companies and lorries will not be allowed to handle intra-US business. There has to be a cross-border element. The decision is also a blow to several states which had backed the court action and the need for an environmental impact statement. California was one of nine states to call for such a statement; the state government said that the decision represented a backward step in the move towards cleaner air and healthier people. Mexican lorries are supposed to be older and dirtier than US ones. The US Department of Transport has already carried out a limited survey of the environmental effects of Mexican lorries. These lorries make 4.5m cross-border journeys each year.
What happens next
The US government said that it will launch a consultation process with Mexico to draw up a system of security checks so that Mexican lorries can use US roads. What the US Department of Transport wants to agree is a schedule for the frequency of inspections and establish qualifications for the inspectors.
The president of the US Chamber of Commerce, Thomas Donohue, said that the Supreme Court decision puts an end to the delaying tactics employed by the opponents of Nafta. He added that these delays undermined US credibility because it frequently demanded that foreign countries should open their markets to US goods and services, in accordance with commercial agreements, yet when the US had to open its markets, under those same agreements, it refused.
The decision is important. The bulk of the trade in goods between the US and Mexico goes by road. Exactly how much is unclear. The US Chamber of Commerce reckons that at least 80% of the US$235bn of goods that are traded between the US and Mexico each year, go by road. The US Department of Transport put the value of the cross-border road traffic at US$161.5bn in 2002. Some environmentalists say that they may now try to use congress to thwart the Supreme Court decision. These environmentalists argue that the Supreme Court decision is only procedural. Congress could then introduce air quality legislation that would have the effect of preventing Mexican lorries from using US roads.
Consequences
Mexican economists say that the decision will lower shipment costs from Mexican factories to US customers. This should help Mexican companies compete better against competition from China. The Mexican government claims that the US embargo on its lorries using US roads has cost its exporters billions of dollars.
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Telephone dispute also sorted
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| The US and Mexican governments issued a joint statement on 1 June saying that neither of them would appeal against a World Trade Organisation ruling in a dispute over telecoms. US telecoms companies had complained that the Mexican regulatory system was biased against them. Under the terms of the deal, Mexico agreed to alter its rules on charging for long distance and international calls. In particular, the deal will end the practice under which the company with the biggest slice of the international business originating from Mexico (ie Telmex, the former state monopoly) represented the whole of the Mexican telecoms industry in international markets where prices were agreed for international calls. In these negotiations, the cost of connecting the call is allocated between the originating network and the connecting network. As the bulk of the international business between Mexico and the US involved Mexicans living in the US ringing Mexico, a business in which Telmex is active only at the Mexican end, the company was able, effectively, to penalise its two main competitors, Avantel and Alestra, which have major US telecoms companies as shareholders. Under the terms of the deal, Mexico has also agreed to allow telecoms companies to resell international-call capacity to third parties 13 months after the WTO sanctions the deal. This should make the Mexican international market more competitive. The main concession from the US, which represented US telecoms companies such as AT&T, is that it will stop by-pass deals. Under these, call traffic was passed off as data traffic and thus commanded a lower connection charge. |