Container Cast 44, Creating Border Environment 2014

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Jonas Wilkinson
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1 Speaker: Time: Text: This is ContainerCast from the Center for International Trade and Transportation at California State University, Long Beach. I m Mat Kaplan, and I ll be talking once again with Tom O Brien. Executive Director of the C-I-T-T and the Associate Director for METRANS, Cal State Long Beach programs. That s the METRANS Transportation Center in partnership with the University of Southern California. Tom, welcome once again at ContainerCast. Hey Mat, it s good to be here. So here s the column I ve got in my hand that you wrote in March of 2014 called Creating a Border Environment that Welcomes Trade. Because the United States has two very important partners on its Northern and Southern borders, and I want to pose this trivia question that s anything but trivial, Who is the United States number one trade partner? Well, it s not who most people say, which is China. The answer is Canada, with good reason, they re one of our closest neighbors, obviously, we have an integrated economy, driven by both market forces and policy because of things like NAFTA. We have a lot of intra-company cross border trade that occurs, you have a lot of component parts for industries like the auto industry that are shipped back and forth and produced for markets on either side of the border, and we also have a lot of people sort of moving across that border as well creating a vibrant economy and a demand for goods and services. Canada is the correct answer. Mexico has been number two, right now I believe it is number three behind China.... behind China. But those two partners Canada and Mexico have really been critical and very often we take them for granted just because they re there. Page 1

2 The situation according to your column is quite different on the Canadian border than it is on the Mexican border. I guess there s been some pretty good progress made using the movement of goods from our Northern neighbor. Right, there s a higher level of technology deployment, there s more integration of facilities, of joint planning, operations, both at the state to province level, Washington and British Columbia being a prime example, Michigan and Ontario being another. And also nation to nation there ve been pilot programs from a security prospective that the Obama and Harper regimes have signed. It s a much more fluid border. There s a higher level of trust, frankly, between the two nations, there s a higher level of support for each other s operations. Not that they re fully integrated, but there s a sense that there could be a harmonization of approaches when it comes to, for example, border inspections. This is something that has come up before, because we ve talked about goods that might arrive at a Canadian port and then be brought into the United States over land, and there s been some progress made with both countries basically not repeating the process of inspecting that cargo. Yea, I referenced a little earlier the Obama-Harper Agreement which was designed to sort of move Canada and the U.S. toward a North American perimeter. And this is fairly new, right It is fairly new With Harper being the Prime Minister of Canada The Canadian Prime Minister, right, so this is a couple of years old that we re talking about and the Agreement included a number of pilot programs to be tested that would look at the U.S. s willingness, for example, to accept a Canadian security clearance for goods that might come in at the Port of Prince Rupert and then be shipped by rail into the U.S., and instead of unloading the rail cars and doing a second inspection, they would simply verify the inspection that the Page 2

3 Canadian s had done as a combination of technology and policy. It s moved a lot more slowly than people had hoped for, but at the same time we have a framework in place to continue to test this type of thing. And the Canadians would do the same thing for goods that might come in to the U.S. that would be destined for a Canadian market where the principal port of call would be a U.S. port. But as I said I think even what s more interesting about the U.S.-Canadian border is how regional planning organizations and states on both sides have decided it s in their own best interest to create fast track lanes, or joint planning exercises, or unique ways to pay for projects that benefit the movement of goods on both sides of the border. And as I said that s where Washington State and British Columbia have really created a model program that includes the Watkins County Council of Governments, the State of Washington, and the Province of British Columbia. They really approach their border crossings that move from Washington and British Columbia and vice versa as an integrated system, which makes a lot of sense. So they have policies that are designed to sort of improve flows across the regional borders and this is for both goods and for people. They look at it as a system which I think a lot of other border crossing regions could benefit from. Well let's talk about that other region our trade partner to the South, contrast that with the improving relationships in the examples you've given with Canada. It's a much more complex border arrangement. From a security perspective there's always been concerns that the openness of the border creates potential avenues for terrorist goods to be shipped in. There have been concerns expressed by the labor and the environmental communities that Mexican trucks that might be coming over and servicing goods movement on this side of the border would not meet the same regulatory and environmental standards. There have been opposition from labor unions to potential loss of jobs for U.S. truckers to Mexican truckers. There is a pilot program that would allow Mexican truckers to service a broader range of U.S. markets as opposed to a very limited border, avery narrow border, which has always been the case, but we've had few takers because the regulatory hurdles have been so great. In fact, the Mexican government has imposed some regulatory tariffs in the past against U.S. goods arguing that we were in violation of NAFTA by not having a fully open border to Mexican trucks. I have nothing but anecdotal evidence, but I've heard truckers or trucker brokers argue that some Mexican truckers don't want to become a trusted carrier, meaning that they would have priority access to the border, because it would make them a target for illegal activity. Page 3

4 illegal activity wow! So as I said it's a much more complex environment. The capacity of some states, and some Mexican states, and the Mexican government to deploy technology that would integrate operations has not been as easy as it has been in the U.S.-Canadian context as well. So it's much, much more difficult. That's not to say that there haven't been some positive strides made. There aresome very, very interesting examples coming out of Texas, for example, that are looking at improving border related services, mostly on the U.S. side, but that benefit flows of goods and people across the border that frankly service both Mexico and the U.S. What drives and funds these efforts to try and build these alliances between nations and regions? This is a good question, right, because very often we start with the national governments involved and it depends on who the players are at the national level. So at the U.S. level you have to start with customs and border protection and the G.S.A., General Services. General Services is sort of responsible for building the infrastructure at the border, the border crossing and CBP for making sure that customs and immigration rules are complied with. They're in the business of security. Yes CBP, they have to strike this balance, and it seems, considering the political environment in the world, they're going to come down more on the security side than goods movement. That's their business, they're not in the business of mobility, unlike a seaport where they've got clients and customers, GSA has a job to play in building infrastructure that's secure and safe. CBP doesn't want to speed up the flow necessarily if it means that it facilitates illegal activity. That's why you sort of look to where the incentive is for the private sector to get involved and work with the government, as in the case, to go back to the Canadian context, whether the provinces and the states take over from the federal government because they think it's in their best interest and in the interest of the state's or province's economy to improve the flow of goods. We're seeing some innovations occurring that could benefit both the Northern and Southern border. The dire economic, or constrained economic, environment we've been in has forced the federal Page 4

5 government to be a little bit creative and look to the private sector, for example, to be able to pay to contribute to additional CBP personnel at the border. And the more people you have, presumably the better, the more services you can provide, you have fewer people having to process the number of truckers and drivers and pedestrians wanting to cross the border. So do you see the situation continuing to evolve and hopefully improve, both North and South? It's always going to continue to evolve. I see a more accelerated pace on the Northern border. Right now, actually, you have the Canadian government and the provincial government in Ontario paying for improvements on the Michigan side of the border because they realize it's in their benefit to do so. I don't see that quite yet happening on the Southern border as well. I think technology is going to play a large role. I think technology driven by security is always a potential benefit. I think if private rail interests and private trucking interests see the benefit of increased near shoring activity on the Mexican side of the border then you're going to see investment and pressure to create a more fluid border. Already, I think, in the San Diego region you have a Otay Mesa East crossing that's being developed that's going to be a lot more efficient and going to focus on commercial activity that is, I think, going to improve border flows both at San Ysidro and at Otay Mesa. So I think there will be things happening in fits and starts. I think we need to look at best practices wherever they might be and be a little creative. That's where I was going to go next, because I was just wondering if there are things happening on the Canadian border that have lessons for the Southern border. I think there are. There's the fast track program in Washington state, and a lot of this is sort of data driven so truck drivers and passenger vehicles can get information on where the delays are and can shift their crossing location if need be. That type of information is always helpful. But I actually think for the U.S.-Mexico border, some of the best examples might be in places like Texas where you have the development of regional mobility authorities, where the state has sort of decentralized some of the infrastructure development and the planning to cities like El Paso or regional organizations who actually get a response to the issues on the ground from the agencies that are much closer to the problem. Those come with some more creative funding solutions, some planning solutions, so that different organizations that might normally compete for the same Page 5

6 infrastructure dollars work in a way that everybody sort of takes their turn. This is something, I think, that could benefit our state as well. There's some really, really good planning happening with local CalTrans officials, and with SANDAG, the regional metropolitan planning organization. And to be fair, the problem in a place like San Diego is so acute because of the size and the number of people and vehicles crossing, that it's a lot more complex than maybe some of the other smaller crossings that we have in other places. It's a fascinating facet of the international trade community and I appreciate the chance to talk with you about it. Yes, thank you Mat. You ve just heard ContainerCast. Our guest has been Doctor Thomas O Brien, Executive Director of Research for the Center for International Trade and Transportation or C-I-T-T, at California State University Long Beach. We d love to hear from you. Write to us at ccpe-citt@csulb.edu. ContainerCast is produced by the C.I.T.T., a division of the College of Continuing and Professional Education at California State University, Long Beach, we are also in partnership with the METRANS Transportation Center, where Tom serves as associate director of Cal State Long Beach programs. The C-I-T-T offers an outstanding selection of events, programs, and courses, including the Global Logistics Specialist program. Visit us online at or just Google C-I-T-T Long Beach. We also welcome your calls at Thanks for listening! Page 6

CONTAINER CAST #27: KEEPING UP WITH THE NEIGHBORS

CONTAINER CAST #27: KEEPING UP WITH THE NEIGHBORS Mat: This is ContainerCast from the Center for International Trade and Transportation at California State University, Long Beach. I m Mat Kaplan and I