Regional Development Key to a Strong North American Trade Bloc

North American Trade Bloc

For many years now, a concern of mine has been that the purpose of free trade and the agreements that envelop trade between regions has not been properly explained or promoted to communities, especially at the grass roots level.

Recently, Guillermo Malpica, trade commissioner of Mexico and executive director at the American Chamber of Commerce in Monterrey, Mexico, paid San Antonio a visit for a series of roundtables and presentations on the United States-Mexico-Canada Agreement(USMCA). At an energy sector meeting with Malpica, San Antonio energy industry leaders investing in Mexico were expecting to get a sense of direction and clarity regarding Mexico's energy policies.

One roundtable participant asked "what industries are the winners and the losers" in the USMCA. When you ask questions like these, you are basically taking apart a macroeconomic tool and looking at the individual parts. Separate parts don't work unless they are put together like a precision clock.

These types of agreements are not meant to be dissected. Not unlike the cute little frog you dissected in school, the innards don't look pretty. Trade agreements are macroeconomic tools that are designed to benefit economies. Yes, there were industries that were hit very hard once NAFTA came into play, but those industries were not ready.

The signals were clear when Mexico agreed to enter the General Agreement for Trade and Tariffs GATT in 1978 (today the World Trade Organization). My father, the Deputy Director General for the Foreign Trade Institute of Mexico during the 1970s, would have conferences and meetings with Mexican manufacturers, warning them to be ready to compete, up their quality, and export.

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Transportation Secretary Elaine Chao Stresses Benefits of Long-Term Highway Bill

Secretary Elaine Chao

June ended with the country's top transportation officer emphasizing that a multiyear highway policy directive from Washington is more beneficial to state agencies than a series of short-term extensions of federal guidelines.

Secretary Elaine Chao drilled down on this point, admittedly obvious to stakeholders, during an in-depth conversation with Hugo Gurdon, editor of The Washington Examiner, on June 26.

"The general pattern is in fact to just have extensions, not full reauthorization. But clearly, the certainty of having a longer time frame is very important to those who are involved in infrastructure," said the secretary, sitting across from the journalist on stage at the Heritage Foundation. "State and local governments, you know, if they know they're going to have this money for five years rather than six months, they can actually plan for the future. So a longer-term horizon is better."

The conservative think tank is a few blocks from the Senate side of the Capitol, where the surface transportation panel on July 10 ideally will kick off the obvious task of determining a strategy for reauthorizing surface transportation policy. The current highway law expires in less than 15 months.

By now, a consensus has been established inside the Beltway that advancing comprehensive infrastructure policy is unlikely this year. Separate press conferences in May from President Donald Trump and Speaker Nancy Pelosi announcing their failed negotiations on a $2 trillion infrastructure measure cemented the notion that top-level infrastructure talks had collapsed.

Since then, Trump has focused on immigration policy. Pelosi has pressed forward with investigations into Trump's political and business worlds. The Republican leadership in the Senate has not proposed an infrastructure measure during Trump's tenure.

Reacting to Gurdon's suggestion that comprehensive infrastructure policy would not advance in the foreseeable future, Chao exclaimed, "I haven't given up hope yet."

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Mexico Border Delays Seen Weighing on US Investment, Factories

Border Delays

More cargo from Mexico to the United States is being held up at the border, accompanied by increasing evidence that such delays are dimming prospects for American companies.

Slower trade between the countries since federal border officers recently were redirected to deal with a surge in migrants has been socking businesses with additional shipping costs. The effects likely will cause a modest headwind for second-quarter nonresidential investment growth — which cooled at the start of the year — and already helped to push a U.S. factory gauge to a two-year low in April, according to Bank of America Corp.

"The delays generate a meaningful direct cost for businesses," economist Stephen Juneau said in an e-mail May 6. The disruption may have a significant impact on the flow of goods, as more than 86% of Mexican imports enter the U.S. by land, and impose some $5.5 million in additional costs on U.S. businesses each month, he wrote in a report May 3.

Trucking company Werner Enterprises Inc. said on an April 25 earnings call that it expects border crossing to be "slow for the foreseeable future."

"Freight is still crossing the border at a very slow rate by comparable standards," said Derek Leathers, CEO of the Omaha, Neb.-based company.

Werner ranks No. 15 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

U.S. Customs and Border Protection said March 27 that trade processing would slow, with as many as 750 officers from crossings in the San Diego, Tucson, Ariz.; El Paso and Laredo, Texas, regions being re-assigned. President Donald Trump the next day renewed threats to close the border.

The Institute for Supply Management's factory survey last week showed April conditions at the weakest since October 2016, though still expansionary. The production component also fell to a more than two-year low, which Juneau said likely was in part because of border delays.

Ventus Global Logistics offer solutions to reroute your goods to avoid delays at the border. Contact us for a free quote.

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Tech group calls for national road-user fee

national road user-fee

The federal government should be taking advantage of GPS technology to establish a national "road user charge" (RUC) system for cars and commercial trucks to replace fuel taxes, a tech-based policy group contends.

The Information Technology & Innovation Foundation's (ITIF) is taking its proposal to Capitol Hill on April 25 to try to influence lawmakers as Congress debates how to pay for highway infrastructure.

According to the plan, "A Policy User's Guide to Road User Charges," passing legislation to implement a national RUC system would require a transition period of at least three to five years as automakers develop a standard technology, and as the U.S. Department of Transportation (DOT) funds the development of a national payment system. "During this period, electric-vehicle adoption will grow, further weakening the gas tax as a sustainable funding method for the highway trust fund," the ITIF plan states.

The most recent calls for "user-pay" based infrastructure funding - such as a vehicle mileage tax - started in January after the new Congress settled in and fresh debate began over reauthorization of the FAST Act, the-multi-year surface transportation bill set to expire in September 2020.

While House of Representatives' Transportation & Infrastructure Committee Chairman Peter Defazio (D-OR) has agreed to consider user fees as a long-term option, he supports raising the gas tax as the most efficient way to address the depleting Highway Trust Fund, which is due to run out of money by 2021.

According to the ITIF, while the trucking industry may not be able to pass along all the costs associated with an RUC system to customers in the short run, "truckers should be able to do so in the moderate term and long term if the fees are stable or changed with sufficient advance notice."

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Nikola Rolls Out Trucks for Zero-Emissions Future

Nikola Trucks

SCOTTSDALE, Ariz. — Nikola Motor Co. CEO Trevor Milton, 28 months after unveiling a prototype Class 8 sleeper, presented to about 2,000 attendees and a global audience watching online two heavy-duty trucks and three other specialty vehicles he said are ready to spark a zero-emissions future.

The heavy-duty trucks that drove out from behind the curtains one at a time, amid swirling lights and loud music as people put their cellphones on video, were the stars of the event.

As a bright red Nikola Two day cab took center stage, Milton said, "This is a real truck. This is a real [hydrogen] fuel cell," seeming to speak to those who doubted the emerging truck maker would ever get this far.

Nikola introduced a hydrogen fuel cell Class 8 prototype Dec. 1, 2016, in Salt Lake City, its former headquarters. It is now based in Phoenix.

The day after the presentations here, Nikola offered the public a first look at the trucks as well as two zero-emissions power sport vehicles and another one designed for special forces operations, which included the ability to be operated remotely like a drone.

"We want to transform everything about the transportation industry. With Nikola's vision, the world will be cleaner, safer and healthier," Milton said.

The flat-front Nikola Tre, bound for Europe, and the Nikola Two day cab will be available either with a hydrogen-electric fuel cell or battery-electric power. As battery-electric vehicles, customers can order either one with 500 kilowatt-hours, 750 kWh or 1 megawatt hour battery-pack options.

The U.S. truck is slated to go into initial production in 2022, after field trials. The Tre is expected to reach fleets by 2023, although Milton said during a later press conference he is looking to partner with a European truck maker to reach that market.

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Border wait times swell amid customs officer shuffle to handle migrant crisis

border slowdown

NUEVO LAREDO, Mexico - U.S. President Donald Trump hasn't followed through on his threat to shut the border with Mexico, but one crossing here that connects this Mexican city with Laredo, Texas provided a glimpse of the chaos and economic disruptions that it would likely ensue.

Lines of 18-wheeled semi-trucks carrying auto parts, produce and other goods for U.S. consumers and businesses stretched more than six miles into Mexico Wednesday after the Trump administration shifted Customs and Border Protection agents from Laredo and other Texas border crossings to El Paso and the Rio Grande Valley to deal with the flood of asylum seekers from Central America. Waits to cross the World Trade Bridge, which normally run 30 minutes, reached more than three hours.

The impact of the delays was being felt on both sides of the Rio Grande, with those who depend on U.S.-Mexico trade barely able to consider what would happen if the Trump closed the border. Ernesto Gaytan, president of the Laredo company Super Transport International, which has 200 trucks on the American side of the border and 300 more on the Mexican side, said he couldn't put a number on it, but knew the delays were costing him money. A complete border shutdown, he estimated, would cost his company $200,000 a day.

On the other side of the border, Roberto Hernandez was idling at the back of the line with hundreds of 18-wheelers ahead of him. Hernandez doesn't get paid by the hour, but rather by the number of loads he delivers.

Usually, he makes four cross-border runs a day, earning the equivalent of about $15 per load. But he was only able to make two trips on Tuesday and his is daily pay fell to $30 from $60.

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Ventus Global Logistics operates out of every port in Mexico and we can reroute your goods through other ports even with a border slowdown or shutdown. In addition to land freight, our air and ocean freight services cover both consolidated shipments (LCL) and containers (FCL). Call us today for a FREE quote or fill out our online form.

Doing Business in Mexico

NAFTA

NAFTA boosted the centuries-old business relationship between Mexico and the United States by allowing both countries to benefit from a seamless workshop that undoubtedly made the pie larger. As with any 25-year-old contract, however, NAFTA needed to be revised. Negotiations required delicate balancing between technical and political issues, with motor vehicles and auto parts requiring the lion´s share of the modifications.

In this article, we take stock of the revised agreement and, at the same time, look ahead at what the 2019 business calendar may bring in Mexico through the following top four issues:

  1. The (possible) execution of the US-Mexico-Canada Trade Agreement (USMCA), and what it means, particularly, for motor vehicles and auto parts manufacturing and sales in North America
  2. The newly elected (2018-2024) Lopez-Obrador administration
  3. New Product Safety Requirements and Recall Procedures
  4. The New Mexican Anti-corruption Law

Read the entire article here.
Originally publish in The National Law Review.

Ventus Global Logistics has 30 years of experience providing freight and distribution services for international companies that do business in Mexico. Contact us today to find out how Ventus Global Logistics can facilitate seamless import and export of your goods across North America.