Mexico truck project to become hot topic once more

Sources have said that the Owner-Operator Independent Drivers Association (OOIDA) sent a letter to the FMCSA saying that a lawsuit might be filed if a replacement for the pilot project is even discussed, because when Congress killed the program through the FY 2009 omnibus spending bill, it specified that no federal funds could be used for a replacement project.

The Trucker News Services

5/15/2009

WASHINGTON — When President Barack Obama visited Mexico a month ago, it was anticipated that he would present Mexican President Felipe Calderón with a set of principles to replace the Cross Border Demonstration Project.

The meetings between the two presidents came and went, however, without news of any discussion about a new program. And in the month since, the economy, bailouts, car dealership closings and the swine flu, which ironically originated in Mexico, have dominated the headlines.

But it appears the truck pilot project killed by Congress in March will get some time in the spotlight in the days ahead.

Friday, The Associated Press reported that Washington Gov. Chris Gregoire is urging the Obama administration to quickly resolve the trucking dispute with Mexico to aid export of certain Washington state farm products.

Next week, the topic will be on the agenda for the scheduled May 18 meeting of the Motor Carrier Safety Advisory Committee, a panel that provides advice and recommendations to the administrator of the Federal Motor Carrier Safety Administration (FMCSA) on motor carrier safety programs and regulations.

And, sources have told The Trucker that the Owner-Operator Independent Drivers Association (OOIDA) has sent a letter to the FMCSA saying that a lawsuit might be filed if a replacement for the pilot project is even discussed, because when Congress killed the program through the FY 2009 omnibus spending bill, it specified that no federal funds could be used for a replacement project.

The Act said that “none of the funds appropriated or otherwise made available under this Act may be used, directly or indirectly, to establish, implement, continue, promote, or in any way permit a cross-border motor carrier demonstration program to allow Mexican-domiciled motor carriers to operate beyond the commercial zones along the international border between the United States and Mexico, including continuing, in whole or in part, any such program that was initiated prior to the date of the enactment of this act.”

A spokesperson for OOIDA declined to comment while a spokesperson for FMCSA said the letter was under review.

An advisory committee has been tasked by FMCSA to provide advice and guidance to FMCSA on the essential elements that the agency should include when drafting new legislation to permit Mexico-domiciled trucks beyond the current commercial zones.

FMCSA told the committee that it should consider the top safety concerns raised by Congress, the Office of the Inspector General and others, and offer a framework that recognizes the sovereignty of Mexico as well as the need to operate safely on U.S. roads.

The task given the committee seems ironic given the fact Secretary of Transportation Ray LaHood spent much of the latter part of March and the first two weeks of April scrambling all

over Washington, meeting with Congressional leaders and trucking industry stakeholders in an effort to present the administration with a set of principles to take to the meeting with Mexico’s president.

Last week, when asked if any progress had been made coming up with a replacement program, an administration spokesman told The Trucker: “The safety of our roads, the security of our borders and the flow of goods and commerce between the United States and its neighbors are important to the strength of our economy.  The administration is committed to working with Congress to develop a comprehensive program that will allow for the flow of goods between the United States and Mexico and provide for the safety of our roads in a way consistent with our agreements.”

Gregoire said in her letter that in view of the economic downturn, the loss of any market for U.S. agricultural producers is especially troubling.

“Once the issue is resolved,” she said, "There is certainly no guarantee that Mexican importers will resume their earlier trading relationship with our producers."

Washington farmers exported $87 million in goods to Mexico last year, including frozen potatoes, pears and cherries that are the target of the 20-percent duty. Now Mexican importers will be forced to look for supply sources from other countries, Gregoire said in the letter.

Washington apples are not among the products affected by Mexico's action.

Washington and Oregon produce 84 percent of U.S. pears grown for the fresh market at 17.5 million cartons. Each carton weighs about 44 pounds.

Mexico is the industry's top export market at 12 percent to 13 percent, but the new tariff imposed in March has resulted in lost exports of about 25 percent on last year's refrigerated crop, said Kevin Moffitt, president and CEO of Pear Bureau Northwest, the federal marketing commission for Washington and Oregon pear growers. That equates to as much as 300,000 cartons.

"It's a significant amount of fruit," he said. "We're approaching the end of the export season, if there's any bright side."

The current price of pears for Mexico is about $18 per carton. The 20-percent duty comes in at about $3.60 per box.

Growers in Argentina and Chile, where pears were harvested in February, are beginning to take over the U.S. market there, he said. Meanwhile, U.S. growers are anticipating a larger harvest beginning in August.

"So if we don't get something solved by September of so, it could really have downward pressure on pricing and the returns to the growers," he said.

Canadian potato growers are beginning to replace U.S. exports of frozen potatoes to Mexico, said Chris Voigt, executive director of the Washington Potato Commission.

The U.S. exported $80 million in frozen potatoes, such as French fries and tater tots, to Mexico in 2008, making it the No. 2 market behind Japan. About half came from Washington state.

Washington produced 9.4 billion pounds of potatoes last year. Ninety percent is processed into frozen potatoes.

"This is going to affect the bottom line of growers. If we can't get rid of those tariffs, if they remain in place, all that business is going to shift to Canada, and that means growers are going to have to reduce acres," Voigt said. "Processors will go to the growers and say, 'You're not a grower for us anymore. We don't have a home for your potatoes.'"