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CMPLAW-L  June 1998

CMPLAW-L June 1998

Subject:

Wall Street Journal: Booming NAFTA Has No Infrastructure

From:

"Francisco J. Conde" <[log in to unmask]>

Reply-To:

Internet and Computer Law Association <[log in to unmask]>

Date:

Wed, 10 Jun 1998 17:37:56 EDT

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (237 lines)

        NORTH AMERICA'S SUPERHIGHWAY COALITION
        FOUNDED JANUARY 1994

        (1ST AKA INTERSTATE HIGHWAY 35 COALITION)
        (ONCE KNOWN ALSO AS NAFTA SUPERHIGHWAY  SYSTEM)
        (WORLD'S FIRST INTERNATIONAL, INTEGRATED,       INTERMODAL AND 'INTELLIGENT'
 HIGHWAY        SYSTEM)
        (1,550 MILES FROM LAREDO TO DULUTH, MN)

Top Right Page 1 Feature Story
The Wall Street Journal -- June 3, 1998
ON THE BORDERLINE
NAFTA Reality Check:
Trucks, Trains, Ships
Face Costly Delays
Weak Infrastructure Stands
In the Way of Free Trade;
The Captain's Long Wait
Improvements Take Forever

By ANNA WILDE MATHEWS
Staff Reporter of THE WALL STREET JOURNAL

Close up, Nafta is not a pretty sight.

Along the Mexican border, some freight trains have been backed up all the way
 to Kansas, waiting to squeeze through one-track crossings. Seething, honking
 lines of trucks choke tiny Texas towns with Manhattan-style traffic jams. Even
 ships have problems: Outside the busiest Mexican port, Veracruz, 12 were at
 anchor in the sparkling Gulf waters one recent day as they waited for scarce
 docking space.

"You have to get used to it," sighs Capt. Czeslaw Pacholczyk, whose ship
 recently sailed from Houston to Mexico.

Trade among the U.S., Canada and Mexico under the North American Free Trade
 Agreement is hitting a giant pothole: There aren't enough bridges, rails and
 docks to handle the goods, and the existing structures are often in the wrong
 places, mired in the traffic of busy downtowns. The result can be hours-long
 delays for billions of dollars of goods crossing North American borders.

"This infrastructure was built for a different era," says James Giermanski, a
 professor at Texas A&M International University in Laredo. "It's hamstringing
 the trade."

Extra Expenses

The stakes couldn't be much higher. Last year, the U.S. had $477 billion in
 trade with Canada (No. 1 U.S. export market) and Mexico (No. 2 U.S. export
 market), up 13% from 1997. Squeezing the flood through border bottlenecks
 spreads extra expenses through the economies of all three nations -- as much
 as $2.5 billion a year. But analysts say the real cost may be to Nafta's much-
 vaunted potential as a truly open-trading milieu, the main selling point for
 the controversial 1994 pact. Supporters once advertised a powerhouse trade
 bloc of three closely knit economies.

But "if we're really going to have free trade, you just can't have a truck
 waiting in line for five miles," says Bernard LaLonde, professor emeritus at
 Ohio State University. "From day to day, you don't know what's going to
 happen. It's contrary to the logic of Nafta."

That's a major problem in today's hurry-up economy, where retailers and
 manufacturers demand clockwork precision in transportation to keep factories
 running and store shelves full. Many companies complain if freight is just 15
 minutes late and can hardly imagine waiting hours for urgently needed goods.
 ColeHaan Inc., a unit of Nike Inc., even yanked a shipment of 144 pairs of
 shoes off a truck that was stuck in Mexico for five days; a retail customer
 was already running ads for them. The footwear flew by Federal Express -- at
 more than twice the cost.

Consumers Pay the Price

For U.S. auto companies alone, one study put the price of delays at Laredo at
 almost $3 million annually in wasted time, higher labor costs and extra
 storage expenses. "There's not a flow-through process at the border," says
 Stephen Harley, a logistics manager for Ford Motor Co. Ultimately, of course,
 those extra costs trickle down to consumers; transportation accounts for 5% to
 10% of retail prices.

Though the worst delays occur at about a dozen choke points in all three
 nations, the price tag to fix the infrastructure would be steep: more than
 $2.5 billion (U.S. GDP=$7.3 trillion a year). Some improvements are already on
 the way, including rail yards, ship berths and bridges. But many other plans
 are bogged down by complex bureaucratic rules or local resistance. Permission
 to build a new bridge across the Rio Grande, for instance, requires filings
 with more than 65 government agencies in Mexico and the U.S.

'If We Build It ...'

Meanwhile, some bridges and other facilities built in recent years are in
 little-used places or have bad connections. One span, in Los Indios, Texas,
 gets less than half the trucks it could handle; it's 20 miles from the major
 crossing at Brownsville, where the downtown is crammed with freight heading to
 Mexico. A crossing in Calexico, Calif., waited months for a highway to be
 built on the Mexican side. For a while, the U.S. road connected to nothing but
 sand dunes.

"In some places, there's been an 'if we build it, they will come' attitude,"
 says Rob Harrison, an economist at the University of Texas' Center for
 Transportation Research in Austin.

Nafta itself didn't make any provisions for new infrastructure.
Though the federal government has to approve new border resources such as
 bridges, the initiative comes at the local level, with towns and counties
 typically raising money and planning their own structures. "The infrastructure
 is mixed," says M. Elizabeth Swope, coordinator for U.S.-Mexico border affairs
 at the State Department. It's "good in some places and bad in others."

Of course, a weak infrastructure isn't the only thing holding Nafta back;
 every agency from customs to immigration to law enforcement has a hand in
 inspecting and bogging down border trade. U.S. efforts to detect illegal
 drugs, including searches by trained dogs and drilling holes in truck trailers
 to find hidden compartments, also slow things down. Cultural variances,
 including differing work schedules in different nations, can create problems.
 "We lose half our time with inspections and paperwork," says Larry Fields,
 president of the Texas Mexican Railway Co. of Laredo.

But it's no customs agency that draws Capt. Pacholczyk's ire on his recent
 voyage. It's almost 4 a.m. when his big ship, the Renate Schulte, arrives at
 the Mexican port of Tampico, before going on to Veracruz. He picks up the
 radio to call for a pilot to steer him into the harbor, a service available 24
 hours a day at all U.S. ports. But he gets no response; the port doesn't
 guarantee late-night pilots unless the shipping line calls ahead.

"It's not professional behavior," complains Capt. Pacholczyk, a meticulous man
 who sports a neatly pressed shirt on the bridge even in the middle of the
 night.

Not until afternoon the next day can his ship, operated by Crowley Maritime
 Corp. of Oakland, Calif., finally ease through the narrow channel, with tiny
 fishing boats darting around it. The dock is crowded and chaotic, with workers
 on bicycles dodging cars, trucks and forklifts. Corn unloaded from another
 freighter is scattered across the pavement where it missed the opening of a
 rail car. Tampico has no modern cranes for lifting truck-size cargo
 containers, the way most U.S. and European ports do, so vessels use their own
 cargo lifters, which can take twice as long.

"There's hardly any space," says Rinus Schepen, a Crowley vice president,
 adding that his ships have waited as long as 10 hours for a berth at Tampico.

Stalled in Laredo

Cargo can wait even longer than that in Laredo, by far the busiest U.S.-Mexico
 crossing point; last year, an average of $65 million in goods funneled through
 the city each day. There, the trucks form lines as long as four miles through
 the center of town. One City Council member even suggested setting up roadside
 toilets for the stranded drivers. While waiting for trailers to cross from
 Mexico to the U.S., where they can be switched to American tractors, U.S.
 truckers crowd movie theaters and restaurants; a few have even become regulars
 at the local Casa Blanca Golf Course.

The problem: Much of the freight flows over two aging bridges in the center of
 town. Last year, after decades of heavy use, a 3-foot hole opened up in one of
 them. "You could see the river," says Rafael Garcia, manager of Laredo's
 bridges. The problem has been fixed.

Trains don't do much better there. The most heavily used border rail bridge is
 a one-track structure that was built four decades ago and rattles with 1,250
 rail cars crossing every day. Traffic over it is controlled by Simon Medina
 Jr., an unflappable Texas Mexican Railway employee who works in a dilapidated
 shack with a plastic-foam cup plugging a hole in the door. Sometimes, Mr.
 Medina speaks into two phones, to one in Spanish and the other in English;
 often, he must referee between rival railroads. The companies "act like
 babies," he says. "They say, 'Why can't my train go? I was here first.' "

On a recent night, a mile-long train of coffee, tar and steel crawls through
 downtown Laredo, past the public library and rows of small houses, blocking
 annoyed truck drivers and blasting its horn to warn pedestrians. Suddenly, a
 gauge inside the locomotive plunges: An impatient teenage bicyclist has
 unhooked some cars. Brakeman George Dabdoub leaps out to fix it, returning a
 few minutes later, relieved that drivers aren't swearing at him.

Help on the Way

Railroads, shipping lines and transportation officials say part of the problem
 is the time lag between planning construction and actual building. Even in
 faraway Chicago, where southbound Canadian rail shipments can wait for days,
 Canadian National Railway Co. and Illinois Central Corp. plan to merge their
 systems, so trains can go through the city without stopping. Texas Mexican is
 building a 480-acre facility where government inspections will be held, to
 avoid blocking the Laredo rail bridge, while both Laredo and Brownsville plan
 to build new bridges.

The port of Veracruz is investing more than $300 million to modernize,
 creating new docking space and fixing up cargo cranes, but shipping lines say
 it can't keep up with the relentless growth in traffic. One problem: protected
 historical monuments such as the 400-year-old stone fortress that was built to
 repel pirates but now takes up a chunk of prime waterfront land. And one
 central dock is blocked by two turn-of-the-century warehouses, which also have
 historical-landmark protection.

The U.S. Congress also is stepping in to speed things up, as part of the big
 six-year transportation bill passed in May. The bill allots $700 million for
 border projects and major road corridors for north-south trade. Although
 states have to compete for the money, winners will probably include
 California, Texas and Michigan.

But such legislation won't solve the problem of the Peace Bridge in Buffalo,
 N.Y. There, officials have been fighting for four years to build a new bridge
 to supplement the 70-year-old, three-lane structure, which on an average day
 is crammed with 4,000 exhaust-belching trucks crossing the Niagara River
 between the U.S. and Canada. Locals oppose the somewhat-chunky green-painted
 project that the bridge authority designed; they want a more-graceful
 suspension bridge.

An engineering class at a local university prepared six designs for an
 assignment, while a local architect suggested colorful awnings that would
 protect the bridge from the elements. "We've had people weigh in with almost
 every kind of plan imaginable," says Steve Mayer, operations manager for the
 bridge.

Lengthy Process

What's more, potential border crossings face a complex international
 government approval process that has mired one group, in McAllen, Texas, for
 six years. There, officials have spent nearly $2 million and filed a 14-foot
 pile of documents with U.S. and Mexican officials for permission to build
 seven miles of road and a four-lane bridge. The research included everything
 from interviews with car drivers (to determine traffic patterns) to an
 archaeologist who went over the site with a shovel and a spoon (looking for
 Indian relics) to a naturalist (plans now incorporate three bus-size tunnels
 under the road to help ocelots cross safely).

There may be at least one simple reason why governments are slow to move: Some
 projects have failed to shift traffic. Los Indios, Texas, for example, has a
 well-lit crossing with four lanes and a highway sign promising that the Free
 Trade Bridge is open 6 a.m. to midnight. The chamber of commerce in nearby
 Harlingen, Texas, which helped finance the bridge, has even offered gift
 certificates at shops for locals who cross over.

But the bridge is nearly deserted at 7:30 one recent evening, with a trickle
 of cars and just one 18-wheeler parked at the U.S. end. Though bridge
 officials say traffic is growing, Gary Nichols, marketing director at Contract
 Freighters Inc. of Joplin, Mo., one of the biggest U.S. cross-border trucking
 companies, says he can't remember one of his rigs ever using the crossing.

"It's the bridge to nowhere," he says.

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