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The Mexican Truck Miasma

May 6, 2004

Tags Free MarketsGlobal EconomyU.S. EconomyValue and Exchange

       On April 21, the Supreme Court heard arguments in U.S. Department of Transportation v. Public Citizen (yes, that's Nader's group). Its ruling is expected in June, and it could eliminate the last legal barrier against giving Mexican trucks full access to American highways, by overturning a ruling from the 9th Circuit Court of Appeals in California. If so, it would end the protectionist tactics that have stalled what Nafta said it would accomplish nine years ago.

       Those tactics originally focused on claims that Mexican trucks were too unsafe, buttressed by high inspection failure rates on Mexican trucks crossing the border. When a safety agreement with Mexico killed that line of argument, opponents shifted to claims of unacceptable pollution risks, again based on the age and poor condition of Mexican trucks crossing the border. That is what the court may now dispose of.

Of particular note in this protracted controversy is how those trying to ward off trucking competition and their political allies used the same deliberately misleading basis for two different, but equally bogus claims, dramatically delaying the benefits that a free market would provide consumers.

      That misleading basis was pointing to unsafe and dirty trucks currently crossing the border at undermanned border crossings as proof that it would be too risky to let Mexican trucks beyond the border regions of the U.S. However, those trucks have been unusually unsafe and dirty primarily because of current U.S. policy. Without current border restrictions, the Mexican trucks that would enter the U.S. would be far safer and far cleaner.

      Current border trucking restrictions for shipments entering the U.S. require a costly three-truck delivery dance. Since the cargoes are required to be transferred to an American truck within a few miles of the border, shipments involve a long-haul Mexican truck, then a transfer on their side of the border to a drayage truck, which hauls the shipment across the border, and then another transfer to an American long-haul truck.

      Since the drayage trucks involved spend much of their time idling in line to cross the border, and then immediately offload to other trucks, they are the oldest, most run-down and polluting trucks in use, which dramatically increase border pollution. And they make up a large proportion of border crossings by Mexican trucks, providing horror-story images which American protectionists have used and reused to maintain their insulation from Mexican truck competition.

      According to an article in the Texas International Law Journal, "drayage haulers haul freight between import lots on both sides of the border. Most drayage haulers are years or even decades old. Many lack basic vehicle features like lights, reflectors, good tires, or brakes, or even safety windows. Their trips only cover the length of an international bridge, so they are not prepared for DOT inspection."

      Just like other producers, Mexican trucking companies don't use their best equipment in a way that makes it least valuable. So they don't have their newest trucks wasting time idling at a border checkpoint. They use them where they are most valuable, on long trips where the better fuel economy (and lower pollution) of newer trucks was most beneficial. The use their least valuable, worst mileage, worst polluting, worse shape, least safe vehicles to cross the border, where they fail inspections at much higher rates than long haul trucks would without the border restrictions. Therefore, they are not a sample of the trucks that would operate in the United States if restrictions were lifted.

      Government policy has led to the dregs of the Mexican trucking fleet crossing the border, and thus to higher inspection failure rates for Mexican trucks (37% of Mexican trucks inspected failed, versus 24% for American trucks in 2000). That was then played as the safety "trump card" to keep those trucks out of the country. That would not be the case, however, in the absence of America's shipping restrictions and undermanned inspection stations.

      Where the chances of being inspected are slight, it is less costly for a Mexican trucking company to use "marginal" trucks and have a small fraction detained and repaired than to raise all their border-crossing trucks to U.S. standards. Consequently, many Mexican truckers at such inspection stations play the odds with substandard trucks, leading to a very high failure rate for the few trucks inspected. But that high failure rate does not prove that Mexican trucks are unsafe. It just demonstrates that those trucks most likely to be unsafe will enter the U.S..

      Otay Mesa, near San Diego, which is the major entry point for Mexican trucks into California, tells a different story. With a state-of-the-art border inspection station and an intensive inspection regime, only 23% of Mexican trucks failed inspection at Otay Mesa, insignificantly higher than the 22% failure rate for California trucks, and slightly better than the national average for U.S. trucks. Such experience shows that when there border inspection stations work efficiently, Mexican trucks are no less safe than American trucks.

      As the Texas International Law Journal article described the situation, "

       "It is unlikely that Mexican motor carriers would use drayage carriers for long-distance travel, since the risk of breakdown or being turned away at the border is a costly expense. The United States, however, possesses no data on the failure rates for [Mexican] trucks that are actually used for long-distance freight hauling. The DOT report compared apples to oranges when it denounced the safety of Mexican trucks on the basis of Mexican drayage haulers. The report was an inaccurate and misleading assessment of what safety conditions would be like if the border were opened."

      Further, if American policies that cause the dirtiest, as well as least safe, trucks to now cross our border were eliminated, there is little reason to expect the results to be substantially different for pollution from Mexican trucks. If American roads were opened to Mexican trucks, the best and newest trucks would be used for the longer direct hauls and the oldest, dirtiest trucks would disappear from the border, reducing pollution in those often highly polluted regions. If inspection stations were managed efficiently, there would also be less time wasted idling in line at border checkpoints, which would reduce pollution further.

      As they heard oral arguments, some of the Supreme Court justices seemed to recognize that this case was in large part about how easily any well-funded special interest that doesn't like a government policy can hold it up with long and costly litigation delays, using America's massive assemblage of regulatory rules and regulations as a series of pretexts. Such obstructionism only continues the claims on our wallets and choices that special interests maintain through the agency of government regulation.

      Relaxing the absurd and inefficient regime America imposes on cross border shipping from Mexico would save U.S. consumers from paying the substantial extra transportation costs the current system imposes. Further, it would open Mexico up to efficient U.S. trucking firms, since they are now excluded from Mexico in retaliation for the U.S. ban on Mexican trucks. It would also increase safety and improve the air in congested border areas.         

      Free trade creates wealth. That also applies to free trade in shipping the goods we trade with others, which is why excluding Mexican trucks is very costly to U.S. citizens. That high-cost, low-benefit approach appeals to those whose protected jobs are threatened and those who refuse to understand why free trade benefits each of the parties involved, but it unduly restricts our liberty to deal with those we choose and accomplishes nothing that advances Americans' general welfare.


Gary M. Galles is a professor of economics at Pepperdine University. Send him MAIL, and see his Mises.org Daily Articles ArchiveUp From Slavery is online. Discuss this article on the blog.

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