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NAFTA and Mexican Trucking

The case explores the implications of regional economic integration for various groups. Under the North American Free Trade Agreement (NAFTA), Mexican truckers were to have been allowed to drive their trucks directly into the United States and avoid the costly and time consuming border unloading and loading that took place prior to the agreement. However, fearing job losses in the industry, the U.S. Teamsters Union rigorously opposed the legislation. Although the group ultimately lost its fight, the United States still did not give Mexican
truckers freedom to deliver their goods, prompting Mexico to institute retaliatory measures affecting $2.4 billion of goods exported from the United States. Discussion of the case can revolve around the following questions:

QUESTION 1:What are the potential economic benefits of the trucking provisions in the NAFTA treaty? Who benefits?

QUESTION 2: What do you think motivated the Teamsters to object to the trucking provisions in NAFTA? Are these objections fair? Why did Congress align itself with the Teamsters?

QUESTION 3: Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States?

Solution Preview

The potential economic benefits are cheaper transportation and less time for shipping products, especially those that are subject to damage or time sensitive for use. The amount of loss from ruined produce can devastate growers and suppliers along with the stores that depend on fresh food to sell. Every component along the supply chain and every consumer that buys products from Mexico saves when the system is simpler and more consistent.

The Teamsters issues are twofold. They have many workers that would be out of work or have work cut by allowing ...

Solution Summary

The solution discusses NAFTA and Mexican trucking.