Dairy Suffers as Obama Cuts Mexican Trucking Funds
US - The $410 billion omnibus appropriations bill signed last week by President Obama eliminates the funding for the U.S. Department of Transportation’s Cross Border Trucking Pilot Program with Mexico.
23 March 2009
2 minute read
The program, which allowed Mexican trucks to deliver goods to U.S. destinations, was designed to fulfill U.S. obligations to Mexico under the 1994 North American Free Trade Agreement (NAFTA). This move has potentially harmful trade implications for U.S. agriculture, says the International Dairy Foods Association.
The trucking program was important for the dairy processing industry, because Mexico is one of the largest trading partners for the United States. Domestic dairy exports to Mexico totaled over $936 million in 2008, almost a 10 per cent increase from 2007. U.S. dairy imports from Mexico reached nearly $140 million in 2008, a 32 per cent increase from 2007 trade values. Because trucks move more than half of this trade flow across the shared border, the program helped to lower costs and ease congestion throughout the supply chain.
NAFTA obligations do not allow blanket exclusions of Mexican trucking firms on U.S. soil. The danger of this program's demise lies in trade retaliation; Mexico is within its rights under NAFTA to issue its own sanctions. U.S. businesses, agriculture included, could potentially stand to lose upwards of $2 billion in exports and jobs.
"IDFA has continually supported the funding of the cross border trucking program and believes the program is vital to maintaining good trade relations with our Mexican counterparts," said Clay Hough, IDFA senior group vice president and general counsel. "We will continue our outreach efforts and advocate the program's reinstatement."
After signing the omnibus bill, President Obama stressed that he welcomes the opportunity to fund the program again in the future, once congressional safety and environmental concerns are addressed.
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