U.S., MEXICO AGREE TO SETTLE TRUCK FEUD

WASHINGTON - The U.S. and Mexico unveiled a deal Thursday to resolve a
longstanding dispute over cross-border trucking, an agreement that
could help ease tense relations between the two neighbors.

The deal seeks to end a nearly 20-year ban on Mexican trucks crossing
the U.S. border, a violation of the North American Free Trade
Agreement that subjected $2.4 billion of U.S. goods annually to
punitive tariffs by Mexico. Half of the tariffs will be suspended when
the deal is signed by both nations, expected in about 60 days. The
remainder will be lifted when the first Mexican hauler complies with a
series of U.S. certification requirements, including English-language,
drug and safety tests.

The new requirements for Mexican trucks are tougher than those
established in Nafta and somewhat tougher than those currently in
force for American truckers. Specifically, Mexican trucks will have to
carry electronic recorders to ensure they do only cross-border, not
domestic, runs and to track compliance with U.S. hours-of-service laws.

Nonetheless, the agreement appears to be a setback for U.S. labor
unions, which have backed the ban in its various incarnations and
opposed some other Obama administration trade initiatives, including
efforts to conclude a trade pact with Colombia. Unionized U.S.
truckers say the plan threatens their jobs.

The trucking deal "caves in to business interests at the expense of
the traveling public and American workers," said International
Brotherhood of Teamsters president Jim Hoffa. The union has long said
that Mexican trucks and drivers are potentially unsafe, which the
Mexican government disputes.

A senior administration official said a key concern was that Mexico
would expand the list of U.S. products subjected to tariffs to include
a broader range of manufactured goods.

"We were beginning to hear from farmers and businesses being hurt, and
some closing, because of these retaliatory tariffs," the official said.

The talks over the deal intensified in January. Details were being
hammered out until an hour before the joint announcement from
President Barack Obama and Mexican President Felipe Calderon.

U.S. Chamber of Commerce President Tom Donohue said his group is
"pressing the administration and Congress to finalize the agreement,
move the United States into compliance, and allow an end to these
job-killing tariffs." The Chamber has led a coalition of industry and
agriculture interests who wanted to overturn the trucking ban.

The ban has been one of a series of thorny issues in the U.S.-Mexico
relationship, including drug-crime-related violence along the border.
U.S. Immigration and Customs Enforcement agent Jaime Zapata was killed
and another agent was wounded by gunmen a few weeks ago. It marks the
first time a U.S.-law-enforcement official was killed in the line of
duty in Mexico in several decades.

Mr. Calderon has said the U.S. should do more to help Mexico,
including tightening gun laws and working to lower drug use in
America, a continuing point of tension between the two countries. The
two men sought to play down those differences Thursday. "We have to
take responsibility just as he's taking responsibility," Mr. Obama
said. "We're putting more and more resources into this."

The decision to permit Mexican trucks to enter the U.S. "is very
important," said Luis de la Calle, an international trade consultant
and former Nafta negotiator. Mr. de la Calle said the decision would
boost Mexico's ability to compete in international trade by lowering
transport costs. The agreement, by simplifying the border crossing
process, could even increase border security, Mr. de la Calle said.

The pact is the latest twist in the White House's complex relationship
with organized labor. Unions still provide a large chunk of campaign
cash to Democratic campaigns, and President Obama in his first two
years in office extended a helping hand to organized labor. At the
same time, the White House didn't press for the unions' top priority-a
procedure dubbed "card check" that would have made it easier for U.S.
workers to organize.

The Obama administration scored a coup in December by securing support
from the United Auto Workers for a pending trade agreement with South
Korea. But unions have since come out against a trade pact with
Colombia, which Republicans in Congress say must be passed on a
similar timeframe with the Korea agreement.

Mexican truckers were allowed into the U.S. under Nafta, which was
signed in 1994. But unions and their allies in Congress repeatedly
used legislation to block access. Nafta ruled in the late 1990s that
Mexico could impose punitive tariffs, which it did in 2009, after Mr.
Obama signed an unrelated bill that canceled a George W. Bush-era
pilot program designed to grant temporary access to Mexican
cross-border truckers.

The list of goods subjected to punitive tariffs has steadily increased
since then, including U.S. construction equipment, pork, fruits and
vegetables, a range of processed foods, even Christmas trees and
suntan lotion, threatening an increasingly wide range of industries
and their workers.

Thursday's agreement "puts us back to where we were two years ago,"
when Mexico first imposed tariffs, said Bill Graves, president of the
American Trucking Associations, the industry's chief lobbying group,
which praised the agreement. "If I was one of the businesses being
hammered by the tariffs for the past two years, I'd wonder whether it
was all worth it."

The Transportation Department hopes to have a proposed agreement
available for congressional briefings and public notice and comment by
late March or early April. After responding to public comments, the
U.S. would finalize the agreement with Mexico. The U.S. Trade
Representative's office would then ensure the tariffs are lifted as
agreed.

- -Jose de Cordoba contributed to this article.