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The NAFTA agreement (North American Free Trade Agreement) is a treaty passed in 1994 that allowed 2000 trucks from Mexico and the US to cross each other’s borders to deliver goods (Hill, 2013); however, there were differences between the US and Mexico that caused for provisions to be considered. Teamster believed that even though it would be less costly for road transportation to used Mexican trucking firms, it would cost many American truckers their jobs and that Mexican truck driver had “poor safety records” as well as “did not adhere to the strict safety and environmental standards” of the United States (Hill, 2013. p.312). Since then, there has been a constant struggle between Teamsters and the American court as well as Mexico placing tariffs on about 2.4 million goods shipped from the U.S and costing companies more than $2 billion (Copeland, 2011). The treaty was initially suspended by President Clinton in 1995 because of safety concerns and although in 2007 the Bush administration presented a pilot program that would allow a limited number of Mexican trucking companies to drive across US borders, funding was still cut off because of the same safety concerns sited by Congress. (Griswold, 2011).
Mexico benefits automatically with the increased use of their independent and less costly trucking company, which would create more jobs in their economy, however, they would have to adhere to US safety inspections and regulations placed on hours driven in the US. Mexican Secretary of the Economy Bruno Ferrari states that “more than 70% of our bilateral trade, which is over $400 billion, moves across the border by truck” and the agreement would help with competitive advantage in the global economy (Copeland, 2011. p.1). So continual trading with the US is detrimental to Mexico’s overall economic levels and will increase revenue for the country.
There, however, are a few potential economic benefits that will benefit America when and if provisions in the NAFTA treaty are finalized. First, many supporters of the agreement believe that it will put an end to all tariffs placed by Mexico (Copeland, 2011) and will be relief for those states effected most such as California, Washington and New York (Hill, 2013). It also has the potential to create jobs to counteract jobs lost during the past 15 years because of the issues with the treaty and create more trade between the two countries (Copeland, 2011). The main issue that created issues for the US is that many believed that there were no “legitimate safety concerns” but the agenda was pushed by “protectionism” and prejudice because of stereotypes held by US truckers and protection against competition from Mexican truckers (Griswold, 2011 p.1). Griswold believes that the US failure to comply has cost of economy greatly and has tarnished America’s reputation “as a good citizen of the global trading system” (p.1). Hence, the American economy could benefit if provisions are met to pass the treaty which would help reconcile its image in the global trading industry and to make bring our own nation into compliance of regulations within a mutually beneficial agreement with Mexico.
Since then an agreement has been signed to resolve the 15 year dispute with the NAFTA agreement which will allow free trade provisions between both countries. Mexico has signed an agreement to drop half of the tariffs on 100 US products granted the US reinstate the pilot program for truck certification for Mexico (LaFranchi, 2011). There are still concerns raised by Teamster that has caused many debates, this treaty will be continually be a concern for both countries for a while.
Copeland, L (2011) Mexican Trucks To Haul Freight On U.S. Roads. Retrieved from http://usatoday30.usatoday.com/money/economy/2011-08-10-mexican-trucks-us-highways_n.htm
Griswold, D. (2011) The Pilot Program on NAFTA Long Haul Trucking Provisions. Cato Institute. Retrieved from http://www.cato.org/publications/congressional-testimony/pilot-program-nafta-longhaul-trucking-provisions
Hill, C.W. (2013) International Business; Competing in the Global Marketplace. 9th ed. New York, NY: McGraw-Hill Irwin.
LaFranchi, H. (2011) Landmark US-Mexico Trucking Agreement Resolves 15 Year Conflict. Retrieved from http://www.csmonitor.com/USA/Foreign-Policy/2011/0706/Landmark-US-Mexico-trucking-agreement-resolves-15-year-conflict