Sunday, September 9, 2007

Mexican Trucks Begin Deliveries Beyond U.S. Border (Update1)

By William Freebairn

Sept. 9 (Bloomberg) -- Mexican trucks delivered goods beyond a border region of the U.S. for the first time this weekend, under a test program by the two governments, Mexico's transportation minister Luis Tellez said.

Transportes Olympic trucks, authorized last week to deliver goods beyond a 25-mile (40-kilometer) zone along the border, crossed into the U.S. Sept. 7 and delivered construction goods to New York state, Tellez said during a news conference today in Mexico City. The company is based in Apodaca, Mexico.

The expanded ability of Mexican truckers to deliver goods ``will give a significant advantage to Mexico because it allows us to take advantage of our biggest competitive advantage, which is to be located next to the U.S.,'' Tellez said.

Before the program, Mexican trucks were limited to delivering goods in the border zone or passing them to U.S. trucks. Mexican officials authorized a U.S. trucking firm to deliver goods inside Mexico last week.

The agreement between the U.S. and Mexico, which will open cross-border deliveries to 100 companies in each country within four months, was part of the 1994 North American Free Trade Agreement.

Both governments contend it will save consumers money and help the U.S. and Mexican economies. Opponents, including the 1.4 million-member International Brotherhood of Teamsters, a union representing some American truckers, environmental groups in the U.S. and trucking interests in Mexico, say it will lead to job losses and increase hazards on the roads.

Concern About Competition

Tellez said some trucking groups in Mexico believe the country is not ready to compete with U.S. companies delivering to Mexico. He said the complaints are similar to those of other industries following the approval of Nafta 12 years ago.

He said safety complaints by Teamsters are ``a pretext'' for concerns about competition with Mexican truckers.

Stagecoach Cartage and Distribution of El Paso, Texas, became the first of 100 U.S. trucking companies to win approval from the Mexican government to go beyond a border zone inside Mexico, the motor-carrier safety agency said Sept. 6.

Nafta required the U.S., Mexico and Canada to open their roads to trucks from all three countries. Canadian trucks have had full access to U.S. roads, while Mexican trucks have been forced to offload goods to U.S. truckers in a border zone. U.S. companies faced similar limits in Mexico.

Attempts to Stall

Under pressure from organized labor, Congress successfully stalled broader access in the U.S. for Mexican truckers. After President George W. Bush announced he was going ahead with a test program in January, opponents tried to block it again.

The 9th U.S. Circuit Court of Appeals in San Francisco on Aug. 31 refused a request from the Teamsters and other groups to block the vehicles. Democrats in the U.S. House asked the administration on Sept. 6 to hold off on the test until they could get assurances Mexican trucks would be safe.

Letting Mexican trucks operate in the U.S. benefits companies such as Con-way Inc., the largest U.S. regional trucker. San Mateo, California-based Con-way in July bought closely held Contract Freighters Inc., which said 40 percent of its business begins or ends in Mexico.

The trucking business between the two countries will become more efficient and costs will drop, said Carlos Arce, undersecretary of foreign investment in Mexico's Finance Ministry. ``This will bring a more dynamic economy in both countries,'' he said during the press conference.

About 70 percent of the $330 billion in trade between the two countries is carried by road, Mexico's Communications and Transportation Ministry said today in a statement.

Two Mexican trucks crossed the border Friday and delivered construction goods to destinations in South Carolina and New York, Tellez said. The trucks will return to Mexico carrying shipments of steel, he said.

To contact the reporter on this story: William Freebairn in Mexico City at .

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