Date: 2001-2005

Should Mexico’s trucking firms be allowed to do business in the United States and invest in U.S. trucking firms? A NAFTA dispute settlement panel recently ruled on these issues, offering a qualified “yes” as a final judgment. The ruling is the first substantive analysis of a services discrimination dispute under either the NAFTA or the WTO. It also completes the longest and possibly most sensitive NAFTA dispute. Under Annex 1 of NAFTA, the United States was required to open four border states to Mexican truckers by December 1995 and all borders by January 2000. In addition, Mexican investors were to be allowed to own enterprises providing trucking services between points in the United States. The United States had cited safety as the reason for not implementing its obligations under Annex 1.

According to Michael Hathaway, a principal in Nathan Associates’ International Trade Group and member of the panel, the recent ruling means that “the U.S. will be required to process Mexican service providers’ applications for operating authority, but any NAFTA party may establish its own level of protection—such as for safety—and devise measures to ensure that the service providers of other NAFTA members meet those standards. While national treatment, or non-discrimination, must be ensured, it also allows for different treatment of foreign service providers.”

In practice, then, the United States may authorize Mexican trucking services to provide cross-border services to points in the United States and to invest in U.S. trucking firms. But the regulatory measures to ensure safety levels for cross-border services need not be identical to measures applied to U.S. service providers. President Bush has said the U.S. will implement the panel’s decision.

Hathaway, a member of the Chapter 20 Roster of NAFTA panelists, is an expert in NAFTA, WTO agreements, trade legislation, and dispute settlement.