Explain the significance of the following case: In the Matter of Cross-border Trucking Services (NAFTA Arbitral Panel, 2001 )30

Facts

The United States had a moratorium on accepting applications from Mexican-owned trucking firms to operate in the US but was accepting applications from Canadian trucking firms to operate in the US. The United States had listed this as Annex 1 reservation to NAFTA, but this reservation had expired. Mexico alleged that the United States was in violation of Article 1202 (national treatment for cross-border services) and/or Article 1203 (most-favoured-nation treatment for cross-border services). The United States alleged that Mexican trucking companies can be treated differently from US and Canadian trucking firms because Canada had what the United States considered to be an "equivalent" regulatory system, while Mexico did not and, therefore, was not in "like circumstances" for the purpose of the relevant articles of NAFTA.

Issues

Did the United States violate the requirements of national treatment and MFN treatment by not allowing Mexican trucking firms to operate in the United States?

Decision

The United States was in violation of its obligations under Article 1202 (national treatment for cross-border services) and Article 1203 (most-favoured-nation treatment for cross-border services).

Analysis/Application

The fact that the Mexican regulatory system may be inadequate is an insufficient legal reason not to consider applications from Mexico. The panel did not determine that NAFTA parties cannot set the level of protection they deem appropriate, nor did it determine that the safety standards set by NAFTA members must be applied. However, failing to consider and award applications on the basis of nationality is a prima facie case of discriminatory treatment.

COURSE NAME: LEGAL ASPECTS OF INTERNATIONAL BUSINESS LAW