Analyzing Trucking Provisions
What are the potential economic benefits of the trucking provisions in the NAFTA treaty? Who benefits?
The North American Free Trade Agreement (NAFTA) is aimed at reducing the costs incurred by nations in transportation of goods by road. The member states of the treaty are to benefit. The policy is expected to increase efficiency in transportation of goods to member states. The time spent in unloading and reloading of goods from Mexican trucks to American trucks was a great impediment to fast movement of goods.
However, with the implementation of the NAFTA, trucks from every nation would be crossing borders and delivering goods direct to their customers. This will result in huge economic benefits to the member nations because time spent at the border to unload and reload goods will be a thing of the past.
Increased competition from Mexican companies involved in trucking services would result in lower charges in road transportation. It is also argued that the policy would result in significant savings in cross-boarder trade. This is due to the fact that two-thirds of goods within the NAFTA nation go by roads.
What do you think motivated the Teamsters to object to the trucking provisions in NAFTA? Are these objections fair? Why did Congress align itself with the Teamsters?
Teamsters union represents truck drivers in the United States in America. It strongly opposed the provisions in NAFTA. The union maintained that Mexican drivers had poor driving habits that resulted in many accidents. It also argued that drivers in Mexico routinely violated safety and environmental rules. The union argued that there were no strict punitive measures in Mexico to punish errant drivers.
In the United States, the union maintained, drivers are suspended for committing serious traffic offences. It also rejected the trucking provision on grounds that Mexican trucks are older and dirtier than the American trucks.
The objections by the union are not fair. The pilot study that was launched by the government yielded very satisfying results from the Mexican trucks. The pilot program showed that Mexican drivers had safer driving records than their American drivers.
In addition, the union lobbied the Congress to stop the program immediately. If the union was fair in its objections, then it could not have lobbied the Congress to terminate the pilot program which was yielding good results from the Mexican drivers.
The Congress aligned itself with the Teamsters because the opposition members were approached by the union and lobbied to oppose the plan by the government to honor the trucking provision. The Congress proposed and passed a motion detailing 22 new safety standards that would be met by Mexican trucking companies to operate in the United States.
Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States?
The punitive tariffs imposed by the Mexican government do not bear economic benefits for the United States. The punitive measures imposed tariffs amounting to 2.4 billion USD. Many goods were affected by the punitive measures. Some of these were wine, almonds, grapes and pears. Exports from California were also affected by the 20 percent tariff imposed by the Mexican government.
The goods from California were jewellery and personal hygiene products. Other United States exports impacted by the punitive measures include tableware from Illinois, and oil seeds from North Dakota.
The economic impact is so huge that the U.S Chamber of Commerce has estimated loss of approximately 25,600 jobs. It does not make economic sense for the United States to bear the measures imposed by the Mexican government for failing to honor the NAFTA. The resulting economic losses are too huge for the United States export companies.