Almost 15 years ago, the United States and Mexico made a commitment to allow carriers based in each country to haul international freight throughout the territory of the other country. According to the North American Free Trade Agreement (“NAFTA”), all restrictions on this cross-border hauling were to be phased out between the beginning of 1994 (when NAFTA took effect) and the beginning of 2000.

 

As we all know, this did not happen. Publications ranging from SMU Law School’s The International Lawyer to the San Antonio Express-News have documented the unrelenting efforts of the Teamsters union, self-described safety advocates, independent-trucker organizations and their political allies to obstruct the border-opening process at every turn.

 

It was not until May of 2007 that the U.S. Department of Transportation (“USDOT”) took the first concrete step forward. It announced a “demonstration project” under which up to 100 Mexican trucking companies could operate throughout the U.S. (and up to 100 U.S. carriers could do the same in Mexico) after thorough scrutiny of their safety programs by regulators in the host country. Since then the project has dodged a hail of bullets from legislators and litigators. It took effect on September 6, 2007, and USDOT announced in August of 2008 that it plans to continue the demonstration project for two more years.

 

But the fight is not over. As recently as September, new efforts were being made in Congress to quash the demonstration project through a pre-election rider to some piece of “must-pass” legislation.  A court challenge to the project continued as well in California. The same old arguments were trotted out again: Mexican trucks are unsafe; poorly-paid Mexican truckers will take away American jobs, and in any event, the carriers themselves have shown little interest in the program.

 

The facts are otherwise. According to USDOT records as of mid-August, Mexican carriers had made approximately 1300 trips into the U.S. without a single accident. In roadside safety inspections, 9.2 percent of Mexican-based trucks were put out of service, but the rate for U.S. trucks is 22 percent. As for job impacts, remember that the demonstration project is limited to international freight only. Mexican carriers cannot haul domestic freight from, say, Dallas to Denver any more that U.S. carriers can do so between Monterrey and Mexico City. The project also does not permit the participating Mexican carriers to transport hazardous materials.

As for the supposed disinterest in the project, obviously carriers of both countries will be leery of investing in a service that can be snuffed out by the stroke of a politician’s pen. After all, necessary investments include driver training, preparation of facilities for constant regulatory scrutiny, and sales efforts in an unfamiliar market.   Even so, it is interesting to look at statistics showing growth in the program from March to August of 2008. The number of Mexican carrier participants has increased from 12 to 27, and the number of U.S. carrier participants has doubled from 5 to 10 (who have made 2443 border crossings) even with all the doubts about the staying power of the project. These figures suggest that despite the political barriers, the industry recognizes the efficiencies of single-truck cross-border service – replacing the cumbersome traditional system of transferring goods from long-haul carriers in one country to cross-border “drayage” truckers to long-haul carriers in the other country.

 

Although the attacks on the demonstration project stalled during the adverse economic developments in late September, renewed attacks can be expected after the election. If Congress and/or the courts do snuff out the demonstration project, the traditional cross-border trucking system will be enshrined along with all of its adverse impacts on traffic flow and air quality at the border crossings. But “safety” advocates will not achieve their objective of keeping Mexican trucks out of the U.S. Ironically, cross-border operations will continue not only by “drayage” trucks, but by U.S.-owned truck fleets based in Mexico, by Mexican carriers holding pre-NAFTA “grandfather” rights in the U.S., and by Mexican carriers transiting the U.S. to and from Canada. None of these trucks are subject to the intense safety scrutiny that has accompanied the demonstration project.

 

Also being ignored by project opponents is a decision issued in 2001 by a NAFTA dispute-resolution panel. It found that the U.S. prohibition on Mexican truck access violated the terms of the Agreement, and could subject the U.S. to billions of dollars in retaliatory tariffs and other damages if Mexico should decide to exercise those remedies. On top of that, the national association for the Mexican trucking industry has initiated another NAFTA complaint proceeding against the U.S. on behalf of its members.

 

It remains to be seen whether future deliberations on U.S.-Mexico cross-border trucking will be any more rational than what we have witnessed so far.

U.S. Customs and Border Protection (CBP) recently announced that it will permit Third Party Logistics Providers (3PLs) meeting certain criteria to enroll in the Customs-Trade Partnership Against Terrorism (C-TPAT) program starting in January 2009.  Although CBP purports to be following a Congressional mandate in section 212 of the SAFE Ports Act (Public Law 109-447, enacted October 13, 2006), a close review of the announcement indicates that few additional providers of logistics services, if any at all, will be able to meet the 3PL eligibility criteria.  In order to be eligible for participation in the C-TPAT program, the 3PL must:

 

Although CBP has taken several years to develop these requirements, the final product appears to have made little if any change in the scope of the C-TPAT program and perhaps to have actually restricted eligibility to participate in the program. The traditional non-asset-operating broker does not qualify for eligibility in C-TPAT, even if it controls the selection of carriers transporting goods into the U.S.    Further, since the C-TPAT program is intended to provide increased security for the supply chain of goods being imported into the United States, it is difficult to understand the relevance of  the requirements that the Logistics Provider must be licensed by a U.S. regulatory agency and maintain a staffed office in the U.S. Shouldn’t the focus of the program be on how 3PLs will ensure supply chain security before the goods are imported into the U.S., rather than afterward? These requirements appear to disqualify Canadian and Mexican domiciled logistics companies that would otherwise be eligible to participate in C-TPAT, and be in the best possible position to advance the objectives of C-TPAT with regard to securing the land borders of the U.S.  The requirement for a staffed office in the U.S. would also appear to violate the terms of NAFTA.  Finally, most of the 3PLs that could meet CBP's new requirements were already eligible to participate in C-TPAT as motor carriers, freight forwarders or NVOCCs.    The inclusion of the licensing and U.S. staffed office requirements may actually restrict the eligibility of foreign based logistics companies that would otherwise qualify in one of these other categories.  

 

If a 3PL can manage to qualify for C-TPAT under the above eligibility requirements, it still must meet all of C-TPAT's minimum-security criteria for 3PLs, which are similar to the minimum requirements for other transportation service providers.  The full text of these security criteria  is available on-line at the following CBP link: http://www.customs.gov/linkhandler/cgov/trade/cargo_security/ctpat/third_party/
security_criteria.ctt/security_criteria.doc . 

Major topics include:

 

--  Business Partner Requirements

1. Service provider screening and selection

2. Customer screening

-- Security procedures

-- Container/Trailer Inspection, Seals, Storage, Security (where applicable)

-- Physical Security and Access Controls

-- Procedural Security

1. Document processing

2. Manifesting

3. Shipping & receiving

4. Handling of Discrepancies

-- Information Technology Security

-- Security Training and Threat Awareness

 

If you have any questions or need assistance in preparing a C-TPAT application as a 3PL, please contact Ken Siegel at:

 

Strasburger & Price, LLP
1800 "K" Street, N.W. Suite 301
Washington, D.C. 20006

General: 202.742.8600
Direct: 202.742.8602
Fax: 202.742.8692

E-mail: Kenneth.Siegel@Strasburger.com

 

The Transportation Worker Identification Credential Card (TWIC), a biometric security credential, will soon be required for all personnel, including truck drivers, who need unescorted access to secure areas of maritime or inland-waterway ports around the country.  The first ports to require compliance with TWIC will be the New England ports. The compliance deadline for New England required commercial truckers to have the TWIC card by October 15, 2008. See chart below for compliance dates in other ports.       

 

Individuals meeting TWIC eligibility requirements will be issued a tamper-resistant credential containing the worker's biometric data (fingerprint template), allowing for a positive link between the card and the individual.  Compliance dates for possessing TWIC cards vary by Captain of the Port (COTP) zone, but again—New England ports’ compliance deadline required commercial truckers to have the TWIC card by October 15, 2008.  

 

The “implementation” of the TWIC program at this time will involve a manual inspection of the individual card, comparing the card picture with the party presenting the card and inspecting the card for any evidence of tampering.    The specifications for electronic card “readers” have not yet been developed. TSA is still involved in “pilot” programs with respect to developing acceptable reader technology, and must conduct a public rulemaking before adopting a specific technology. For now, and for the apparent near future, the TWIC card is merely a very expensive picture ID duplicating other ID programs such as the hazardous materials endorsement on a commercial drivers' license or a merchant mariners' card.  

 

Date	COTP Zone(s)
October 15, 2008	Northern New England, Boston, Southeastern New England
October 31, 2008	Buffalo, Duluth, Detroit, Lake Michigan, Sault Ste. Marie
November 28, 2008	Corpus Christi, Port Arthur, North Carolina, Cape Fear River
December 01, 2008	Long Island Sound, Charleston Savannah, Jacksonville
December 30, 2008	Baltimore, Delaware Bay, Mobile, Pittsburgh, Ohio Valley, Lower Mississippi River, San Diego
January 13, 2009	Hampton Roads, Morgan City, New Orleans, Upper Mississippi River Miami, Key West, St. Petersburg
February 12, 2009	Honolulu, South East Alaska Prince William Sound, Western Alaska
February 2009	Puget Sound, Portland (OR), San Francisco Bay
March - April 2009	New York, Guam, Houston/Galveston Los Angeles/Long Beach, San Juan

 

Federal Register notice will be provided at least 90 days before each port implementation date. Implementation dates may be revised depending on the port’s readiness to implement the program. For further information about TWIC, visit www.tsa.gov\twic or contact Maurine Fanguy, TWIC Program Manager, Transportation Security Administration, at (571) 227-3741 or e-mail her at maurine.fanguy@dhs.gov.