In March 2009, Mexico imposed retaliatory tariffs on approximately 90 products from the United States due to a 16-year-old trucking dispute related to NAFTA. To review our original Client Alert on this issue, please click here. Since the U.S. has taken steps toward meeting its obligations under NAFTA, Mexico has agreed to suspend the retaliatory tariffs imposed on U.S. exports.

Background

The NAFTA trucking dispute began in 1995 when, contrary to its obligations under the Agreement, the U.S. announced it would not lift restrictions on Mexican trucks’ operation on U.S. highways. In 2001, a NAFTA arbitration panel found the U.S. to be in breach of its obligations, however, it was not until 2007 that Mexico and the U.S. agreed to a pilot program granting licenses to 100 Mexican trucking companies and 100 U.S. companies to operate on the other country’s roads. The U.S. ended the pilot program in early 2009 and Mexico quickly retaliated by imposing duties on approximately 90 different products.

In July of this year, Mexico and the U.S. signed a Memorandum of Understanding (MOU) wherein the parties agreed to continue the pilot program. Mexico immediately decreased its retaliatory duties by 50 percent and agreed to reduce the remaining duties as soon as the U.S. issued its first permit to a Mexican trucking company.

On Oct. 14, 2011, the Department of Transportation (DOT) issued its first permit to a Mexican long-haul trucking company to participate in the NAFTA cross-border trucking program. Later that day, the Mexican embassy announced that Mexico plans to suspend the remaining retaliatory tariffs imposed on U.S. exports. Under the July MOU, Mexico is expected to reduce the remaining retaliatory duties within five business days following the issuance of the first U.S. permit (no later than today, Oct. 21, 2011).