WASHINGTON — U.S. Transportation Secretary Mary Peters said Monday that abolishing a pilot program allowing Mexican and U.S. long-haul trucks to operate on both sides of the border could invite retaliation from Mexico in the form of tariffs on U.S. exports into the country.

The administration implemented the pilot program last year to allow as many as 100 Mexican-based carriers to travel inside the U.S. President Bush has tried for years to open the border to cross-border commercial traffic, a stipulation of the North American Free Trade Agreement enacted in 1994. But his efforts were stymied, until last year, by legal challenges over the safety of Mexican trucks.

In a growing dispute, the Bush administration has continued the pilot truck program despite a bill passed by Congress and signed by the president last year that prohibits the use of the agency’s funds to establish a program allowing Mexican-based trucks to operate beyond restricted commercial zones in the U.S.

The White House interprets the bill as permitting the pilot initiative and barring any new programs. But sponsors in Congress say it prohibits any such trucking initiatives.

Ending the program “would force American business to cancel lucrative contracts shipping products [to Mexico]…and such an end would cause a serious threat to many of our successful businesses,” Peters said. “If Congress fails to keep its promise and instead ends the cross-border trucking program under the NAFTA rules, Mexico has every right to impose fees and tariffs on U.S. products.”

Pressed later by reporters, Peters said she had not had direct conversations with the Mexican government about whether it was considering retaliation if the program is eliminated.

Also on Monday, Sen. Byron Dorgan (D., N.D.) joined other senators and House lawmakers in sending a letter to the Government Accountability Office requesting an investigation into whether the transportation agency has violated the law for funding the Mexican truck pilot program.

“The Department of Transportation is not above the law,” Dorgan said. “When Congress passes a law that says no funds can be used for this program, we mean no funds can be used for this program.”

He added that the agency “cannot simply pick and choose which laws they want to follow and which laws they want to break.”

This story first appeared in the March 11, 2008 issue of WWD.  Subscribe Today.

The dustup between the administration and members of Congress came a day before an oversight hearing by the Senate Commerce, Science & Transportation Committee.

The pilot program is supported by apparel importers looking to cut transportation costs by not having to transfer goods to U.S. trucks at the border, as well as many U.S. apparel, textile and cotton exporters that can ship their products to Mexico without having to change trucks to a Mexican carrier at the border. Importers shipped 3.04 billion square meters equivalent in apparel and textiles, valued at $5.6 billion, from Mexico to the U.S. last year, according to the U.S. Department of Commerce.

Teamsters general president Jim Hoffa, whose union has a pending lawsuit to stop the program in the Ninth Circuit Court in San Francisco, said in a conference call: “We do not need unsafe Mexican trucks on our highways.”

Hoffa disputed Peters’ argument that there have been few or no accidents with Mexican truckers, saying U.S. lives will be in danger if Mexican truckers are allowed to drive across the country.

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