Over a year and a half ago we reported on a major trade dispute between the US and Mexico, specifically over a US ban on Mexican origin trucks crossing the border into the US. Mexico retaliated with US/Mexico truck dispute punitive tariffs that totaled $2.4 billion annually, according to the Wall Street Journal. The US, in disallowing Mexican trucks to cross the border, has violated the North American Free Trade Agreement. But no more — the two countries have brokered a deal in which half of the tariffs would get eliminated upon signing of the treaty (expected in 60 days, according to the story) and the other half of the tariffs would get eliminated when the first Mexican trucks pass a series of tests including drug tests, English language tests and safety tests.
Jim Hoffa, president of the International Brotherhood of Teamsters Union, had argued for the ban suggesting that, according to the WSJ, the new law “caves in to business interests at the expense of the traveling public and American workers.”
The punitive tariffs have harmed industry and stifled job growth according to US Chamber of Commerce President Tom Donohue: “This delay put more than 25,000 American jobs at risk, and retaliatory tariffs have been in place for two years on many U.S. products entering Mexico.
The argument for lifting the trucking ban, however, extends far beyond the jobs issue as well. From a US-import perspective, the existing process of essentially forcing every single inbound truck to change over to an American carrier adds nothing but hassle and extends the inbound supply chain. Crossing into the US border already creates potential excessive delays particularly due to the drug wars raging throughout Mexico (and some US cities). In a time-motion study from 2004, analyzing Northbound traffic (Mexico-US) truck re-loading times within Mexico can equate to 17 percent of the total time of moving goods from the border through to the US side.
But the biggest shocker of the time motion study involves the inherent efficiencies (or inefficiencies) of the US side of the equation (not the Mexican side). If you look at the time it takes to process the inbound or outbound truck from the US and Mexico, one might expect that to be about equal. If you made that assumption, you’d be dead wrong. Consider this:
- Leave out the time it takes to truck goods from Chicago to Laredo (it is what it is). The time study concluded that all of the remaining procedures (inspections, drayage, warehousing, congestion, wait time, etc.) ranged from 12 hours to 81 hours (in other words, to export US made goods, it takes 12 -81 hours at the border)
- On the import side of the equation it takes 1.3 to 10.5 hours
The Mexican side of the equation (e.g. the time it takes for the procedural aspects of border crossing) from Mexico to the US is 2.8 6 hours and from the US to Mexico 2.6 5.3 hours.
And here I thought the President wanted to double exports in five years!