January 13, 2017

NAFTA Discussions May Alter New Rule on Lease of Equipment by Mexican Carriers

Holland & Knight Alert
Lawrence J. Hamilton II

It is common knowledge that a major platform of President-Elect Donald Trump's campaign was the need to renegotiate the terms of the North American Free Trade Agreement (NAFTA) with Mexico and Canada. Thus, it leaves open the possibility that the United States might withdraw from NAFTA or, at least, insist on the renegotiation of its terms. Coincidentally, the day after the election, the Federal Motor Carrier Safety Association (FMCSA) declared – following years of discussion – that motor carriers domiciled in Mexico may lease their equipment to U.S. motor carriers regardless of the destination of the cargo, as long as the carriers comply with the federal leasing regulations.

In the summary of the new rule, which became effective on Nov. 22, 2016, the FMCSA stated that "Section 219(d) of the Motor Carrier Safety Improvement Act of 1999 (MCSIA) restricted Mexico-domiciled motor carriers from leasing commercial motor vehicles (CMVs) to U.S. carriers to transport property into the United States until the international obligations under the North American Free Trade Agreement (NAFTA) chapter on cross border trade in services were met. Given FMCSA's acceptance of applications for long-haul operating authority from Mexico-domiciled motor carriers following the conclusion of the U.S.-Mexico Cross Border Long-Haul Trucking Pilot Program, the obligations are fulfilled and the restriction is no longer applicable."

The U.S. trucking industry largely opposes this new rule, and the Rust Belt states that carried Trump into office are certainly not fans of NAFTA. On the other hand, while renegotiating NAFTA holds appeal, withdrawing from it or closing Canadian and Mexican borders to international trade is far more problematic. In any event, some changes to NAFTA appear likely. It is reasonable to expect that the rule will be impacted by new laws and policies established by the Trump Administration with respect to NAFTA. 
  


 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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