Aside from the Casey Anthony verdict, this was a relatively quiet week for news. But for those of you interested in transportation, there were a couple of headlines that grabbed our attention.

It seems like the United States and Mexico have finally settled their trucking dispute, which had led Mexico to levy tariffs on $2.4 billion of US goods annually (see “A Trade War with Mexico”). Click here to read the full Memorandum of Understanding, but here are some excerpts from the press release:

Pursuant to [the] agreement…Mexico will soon lift retaliatory tariffs on more than $2 billion in U.S. manufactured goods and agricultural products, providing opportunities to increase U.S. exports to Mexico and expanding job creation in the U.S. The agreement also provides that Mexico will suspend 50 percent of the retaliatory tariffs within ten days. Mexico will suspend the remainder of the tariffs within five days of the first Mexican trucking company receiving its U.S. operating authority.

 

As a result of these meetings…trucks will be required to comply with all Federal Motor Vehicle Safety Standards and must have electronic monitoring systems to track hours-of-service compliance. In addition, the U.S. Department of Transportation will review the complete driving record of each driver and require all drug testing samples to be analyzed in Department of Health and Human Services-certified laboratories located in the U.S. The Department will also require drivers to undergo an assessment of their ability to understand the English language and U.S. traffic signs. The new agreement also ensures that Mexico will provide reciprocal authority for U.S. carriers to engage in cross-border long-haul operations into that country.

The full requirements are actually more stringent than what US carriers face and they go beyond what was originally outlined in NAFTA. Not surprising, however, the Teamsters are condemning the agreement. In a press release, Teamsters General President Jim Hoffa calls the agreement “a concession to multinational corporations that send jobs to Mexico.” He also says that “[it] erodes our national security…endangers motorists…ignores the rampant corruption among Mexican law enforcement…[and] it lowers wages and robs jobs from hard-working American truck drivers and warehouse workers.”

Are Mexican trucks unsafe? As I highlighted in my commentary two years ago, according to information posted on the U.S. Department of Transportation’s Cross Border Truck Safety Inspection Program website, Mexican carriers that participated in that pilot program actually had a better safety record than US carriers. And like I said back then, when it comes to road safety, I’m more concerned about teenage drivers (who account for $26 billion of the total costs of motor vehicle injuries) and deteriorating bridges and tunnels due to neglect or shoddy construction.

Speaking of transportation infrastructure, there was some action this week in Congress, with House Republicans and Senate Democrats introducing competing bills. According to an article in the Wall Street Journal:

The two-year, $109 billion Senate bill calls for finding some $12 billion in new tax money—from an unspecified source—to maintain existing funding levels for construction of roads, bridges and mass transit. The six-year, $230 billion House measure would slash transportation spending by about a third from existing levels, but its author [House Transportation Committee Chairman John Mica (R., Fla.)] said his bill would encourage private investors to make up the difference.

You know you’re in trouble when one bill depends on finding money (billions!) from somewhere and the other depends on cutting spending and making up the difference somehow.

We’ve written about the politics and harsh realities of infrastructure funding in the past. Here is a sampling:

The bottom line is simple: the current system of how we fund transportation infrastructure projects is broken and there’s no easy (pain-free) fix. As I wrote back in 2008:

The debate mostly [centers] on funding versus financing. Funding generally describes the current system, where money is collected via fuel taxes and vehicle fees. Financing generally implies an investment-centric approach, where private entities finance the building and maintenance of transportation projects (raising money from taxable debt market, banks, public share offerings, institutional investors, etc.) and collect toll fees. I am not an expert on this topic, but like most things in life, the “right” solution is probably a hybrid of the two approaches.

Adding fuel to the debate is the huge investments ($53 billion over six years) the Obama administration is allocating to high-speed passenger rail (see White House press release here). For a critical, and sometimes humorous, analysis of high-speed rail, check out the video below featuring Adrian Moore and Bob Poole from the Reason Foundation, a Libertarian think tank. Or check out this much shorter video from Reason TV.

As Deputy Secretary of Transportation John Porcari pointed out at the CSCMP State of Logistics Report panel last month, the US population is expected grow by 100 million people by the year 2050. How will our transportation infrastructure handle this increase, both from a passenger/transit perspective and a movement of freight perspective? And how will we pay for it, considering the growing deficit and so many other competing priorities, such as health care and Social Security? Unfortunately, “finding the money somewhere” or “making up the difference somehow” is just not going to cut it.

Ok, I better stop before I end up depressing myself. Have a fun and relaxing weekend!

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