A deal signed last Wednesday, July 6, between the United States and Mexico will allow Mexican trucks and drivers to enter deep into the United States as originally envisioned under the North American Free Trade Agreement (NAFTA) 17 years ago. In return, Mexico will lift tariffs imposed in 2009 on approximately $2.3 billion in U.S. goods. Whereas Mexican trucks and drivers were, until recently, limited to carrying loads originating in Mexico to U.S. destinations within 25 miles of the border. Under the new agreement they will be permitted to carry loads to their final destinations in the U.S, wherever they may be dependent on safety inspections, driver reviews, electronic vehicle monitoring and other administrative restrictions.
How will this affect the American trucking carriers, U.S. insurers and those of us who represent them in litigation?
Some of our trucking clients feel that the effects will be minimal. They believe that the multitude of administrative requirements will dissuade Mexican carriers from seizing the new opportunity, and that Department of Transportation (DOT) inspectors at the border will be particularly thorough in their screening efforts. Other U.S. carriers feel that the effects may be slow in coming about, but that they will come about, with certainty. Carriers of this mindset point out that Mexican businesses understand the opportunities available in the U.S. well. They believe that their Mexican counterpoints will take pains to learn the regulations and adapt quickly.
Cost will be a factor, of course. The costs of U.S. regulatory compliance will unquestionably be significant for Mexican carriers. Many of our clients believe that Mexican wages will keep Mexican carriers competitive however, and doubt that costs will outweigh potential profits. The biggest disincentive for Mexican carriers may very well prove to be the costs and burdens of American litigation.
Most Mexican companies are unfamiliar with the American personal injury and wrongful death damages. Under Mexican law, these sorts of damages are commonly controlled by statute, and are significantly limited. Likewise, there are no punitive damages available in accident cases under Mexican jurisprudence. Unless they have been previously directly involved in it, American litigation will be an eye-opening experience for most Mexican businesses.
Assuming that Mexican carriers will begin to venture further and further into the United States, and taking as granted that accidents involving Mexican drivers and trucks will take place as traffic increases, it will be the role of insurers and the trucking defense bar to acclimate Mexican companies to the nuances of American litigation. This presents a responsibility, but also an opportunity. Our firm, for instance, is considering participating in programs designed to inform Mexican carriers about the critical details of the DOT regulations and Texas accident and cargo litigation. We see increased Mexican truck traffic is inevitable, and believe that the more smoothly the transition is made, the better for all. As business continues to become ever-increasingly global, we believe that this new U.S./Mexico trucking deal will ultimately prevent new opportunities for both sides of the border, including carriers, insurers, and all other involved parties.