NAFTA-born Trucking Dispute Resolved

We welcome the news of resolution that will eliminate tariffs on US goods that are in high demand by shoppers throughout Mexico, while opening up a new market for US transport providers. I first covered the US-Mexico NAFTA Trucking and Tariffs issue for Hanson Marketing’s blog two years ago, and as recently as this March.

It’s a tangled issue. The US teamsters’ union’s dissenting view brings up valid points about concerns over safety, security and loss of jobs. The accord allows Mexican transport companies to serve only from Mexican origin to single US destination (no point-to-point within the US). The producers of agricultural and manufactured goods hail the decision because onerous tariffs will be lifted within the next quarter, which resulting international sales revenue will strengthen employment numbers and add to the US’ goal to double exports between 2010-2015.

The most pragmatic, level-headed info I’ve read on the topic comes from The Christian Science Monitor, whose report raises a moot-point scenario that lowers the tension in the room.

“No Mexican company will invest money to join the cross-border program if their truck drivers can be denied permits after an 18-month trial period, as the accord indicates”, says Refugio Munoz Lopez, director general of Mexico’s shipping chamber. “I see no future with this program,” Mr. Munoz says of Mexico’s decision Wednesday to remove punitive tariffs on $2.4 billion of US exports in exchange for allowing Mexican trucks to cross the border. “The only thing this accord does is give Mexico an excuse to remove tariffs.”

Munoz informs the Monitor that “the tough new security requirements for truckers wishing to cross into the United States make it prohibitive for all but 115 out of 400,000 Mexican trucks“. Meanwhile, I see no reciprocal requirements will be imposed on US transport companies, who wish to offer transnational service.

I view this as export growth prospect for one of the US’ powerful and efficient transport sector, which enjoys many competitive advantages over their Mexican counterparts; and will study the views of trade associations within the next 18 months.

Nitty Gritty Marketing entries on this issue:

Read more:

Border Governors Conference: US-Mexico Relations

Santa Fe, New Mexico is site of the latest in a series of Border Governors Conferences, taking place right now. Hosted by Governors Schwarzenegger (CA) and Richardson (NM), the governors of US and Mexico border states – Arizona, Baja California, California, Chihuahua, Coahuila, Nuevo Leon, New Mexico, Sonora, Tamaulipas and Texas – are hashing out vital issues tied to Border Security, Economic Development and Energy.

Why is this referred to as an “interim” conference? Read more at Wikipedia and here. (Hint: the conference was originally to be hosted by the governor of Arizona.)

The only problem is that 3 of the 4 US state governors are no-shows… Govs. Brewer of AZ and Perry of TX, lodging a counter-protest; and Gov. Schwarzenegger, with schedule conflicts. So – the teeth were kind of pulled out of this event right there.

Why should we listen when these six Mexican and four US governors talk? Because their 10 Border States represent a joint economy that ranks third in the world. And, with 42 different ports of entry, the region also represents one of the most dynamic trade and border crossing regions in the world.

Gov. Schwarzenegger is the state’s A-List deal maker; his recent trip to China resulted in preliminary agreements with Chinese suppliers for a high-speed, north-south rail link for the Golden State. (just as in the 19th century, China again contributes to Western US rail expansion… this time through infrastructure technology!) And, Gov. Richardson just secured a grant from the Economic Development Administration (EDA) targeting expansion of cross-border commercial rail service between New Mexico and Nuevo Leon (and he was Pres. Obama’s early nominee for Secretary of Commerce). Read previous Nitty Gritty Marketing posts on EDA here and here.

U.S., Mexico CEOs Partner to Fix Border, Build Business

A new development in US-Mexico trade has caught my eye, because it’s driven by and for C-level business owners, through the US Chamber of Commerce. And it’s likely to build bridges of trade between the two nations that will overcome many of the short-term obstacles to success — immigration, transport, and security problems — in ways that no federal mandate could do.

The goal of Leadership Initiative Vision 2020 is “to make our border work; make both countries more competitive in global markets; promote the continent’s energy independence while respecting our shared environment; raise living standards for our citizens; and enhance inter-governmental cooperation; all within a framework that fully respects and supports national sovereignty and interests.”

Tall order. But when CEOs of growing global companies are all seated at the same table and you serve up some legit, profitable deals, those deals will be carved up and invoiced before dessert. I give high marks to our chambers and officials for turning this program loose. While you do see mention of “high level dialog” taking place, potentially sucking time and effort away from the work world; you also see mention of “working groups” that will shift the Chamber’s plan “from policy aspiration to reality”. The chamber and its members are focused on clearing paths to sustainable business relationships, through hard work, so my sense is the “working groups” will prevail!

Read more about the US Chamber of Commerce’s efforts to build relevant, sustainable trade revenue between the US and Mexico at their website.

NAFTA Wink-Nudge Stalls Mexico’s Trucking in US

The US-Mexican ‘”frontera” is a hot spot for turf rumbles and tariff tussles, on a personal and national scale. At this month’s Leaders Summit in Guadalajara. Presidents Calderon and Obama and Prime Minister Harper classically ducked the thorny subject of NAFTA’s stalled agreement for bi-national trucking reciprocity for Mexico. I suppose Mr. Harper got smart and ducked out to check his voice mail.

As part of the North American Free Trade Agreement (NAFTA), the U.S. agreed to allow Mexican trucks unrestricted access to deliver goods in the U.S., a pledge it has never fully honored because US-based road safety advocates, environmental regulators, and union officials say Mexico’s trucks and drivers have yet to meet U.S. standards. NAFTA rules would also have allowed Mexican trucks to pick up cargo to return to Mexico.

Removing restrictions that prevent Mexican trucks from delivering goods across the border has been a top issue for President Calderon since the U.S. Congress, citing safety concerns, ended a pilot program in March 2009 that, for the first time, had allowed “some” Mexican-registry trucks “some” access to US byways. Upon program’s end, Mexico retaliated by imposing $2.4 billion in tariffs on imported U.S. goods, affecting companies such as Procter & Gamble Co. and Mary Kay Inc. As a result of the inaction and competitive obstacles being faced by its members, Mexico’s National Freight Transportation Chamber (Canacar) representing some 4,500 trucking companies, seeks $6 billion in compensation from the U.S. government because of the trucking conflict, alleging its northern neighbor wasn’t complying with NAFTA.

P&G and Mary Kay, along with CANACAR member truckers, are very large concerns, with orbits of smaller traders, suppliers and vendors relying upon them for their success. All sides are inflicting collateral damage in this turf war, and offer valid and compelling arguments that need to be heard as consensus is reached.

My sense is that this trucking agreement has never been more than lo-cal sweetener thrown onto the NAFTA cake by US negotiators, an overly-optimistic political wink-n-nudge that no US administration has ever cared enough about to cultivate. Somewhere between the US teamster’s claims of poor reliability and safety of Mexican equipment, US environmentalists’ opposition to Mexican truck entry based upon clean air standards, the pro-export, pro-open borders coalition of US exporters; and Mexican trucking enterprises who tire of waiting for the green light to unfettered access to the US transport market … lies the hard truth.

World Trade Week: View from the Border

2009 World Trade Week events in the southern California/US-Mexico border region:

Los Angeles Chamber of Commerce & U.S. Commercial Service co-hosted The Americas Business Forum in Los Angeles May 27-28.

  • Secretary of Commerce Gary Locke reminded guests to tap the US & Foreign Commercial Service’s myriad resources.
  • LA Mayor Antonio Villaraigosa shared his vision of the city as a “21st-century Venice”, a hub of global trade.
  • Bob DeMartini, export manager of Hayward Pools provided a valuable look at winning international sales through hard work and sensible channel relationships. My favorite line: “‘Exclusivity’ means ‘Exclusive Right NOT to Sell'”. Wise advice from a channel veteran.
  • Commercial diplomats from Latin America posts recapped sector growth data and read socio-political gauges. Watch what will happen in Panama in the coming decade: the $5.2 billion Panama Canal expansion project will double the canal’s capacity, and the mammoth Colón Free Trade Zone re-exports $19 billion in goods and services into all Latin American and Caribbean countries and the US, and is set to expand.
  • Orange County Center for International Trade & U.S. Commercial Service co-hosted an excellent Mexico Trade Outlook in Santa Ana May 26.

  • Ann Bacher, Incoming Minister Counselor of Commercial Affairs for the US & Foreign Commercial Service posted impressive statistics: California businesses account for 15% of the US exports to Mexico, valued at about $20 billion. NAFTA is the world’s largest free trade area, home to 440 million people and a GDP of $15.4 trillion.
  • Despite immediate concerns about influenza, sub-standard infrastructure, and narco-violence, US suppliers should keep an eye on such long-term prospects for export growth as aviation-related services and systems, automotive manufacturing systems (GM and Chrysler aren’t the only car makers located in Mexico!), franchising, security and safety systems (more on the Merida Initiative here), and education (online and campus), the latter of which signals a more informed, motivated work force.
  • Carlos Rodriguez y Quesada, spokesman for the Mexican government’s foreign investment agency, PROMÉXICO, reported major infrastructure opportunities: $4 billion to build or upgrade 1400 kilometers of rail, maritime, including the $5 billion Punto Coronet project; highways, energy, telecomm, and manufacturing systems.
  • Have you heard about Cali-Baja Bi-National Mega-Region? The economic development agencies in San Diego and Imperial Counties and the state of Baja California announced this joint venture during World Trade Week, to market the region nationally and internationally.

    At an event near the Otay Mesa Border Crossing in San Diego, I spoke with the new field director of the US Customs and Border Protection Agency, Paul Morris. Paul noted that the Western Hemisphere Travel Initiative (WHTI) quietly went into effect on June 1, and all systems appear to be GO.

    Finally, good news from El Paso. The head of the US-Mexico Border District Export Council, Cecilia Levine, is joining her cross-border colleagues in celebrating the opening of El Paso’s first Department of Commerce office. The new office will collaborate with the DEC as well as promote a Gold Key program tailored to US suppliers who are seeking to preserve trade with manufacturers in Mexico.

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