Friday, September 28, 2007
I am off to the ABA Section of International Law Fall Meeting. If you are in London, please come to my program on Thursday morning. It is called "Buying Trouble: Avoiding Purchasing and Outsourcing Traps in Customs, Trade, and Export Law." We are hoping for an excellent session. Here is a link to more info.
Tuesday, September 18, 2007
In the meantime, please read my most recent article for the NCBFAA CCSContact on-line magazine. This time, I made it to the front page. Enjoy.
Wednesday, September 12, 2007
Now comes the news that the Senate has voted to block appropriations necessary to support the pilot program. If signed into law, this would effectively stymie Mexico's efforts to provide international transportation services outside the border region.
Jeez. I get that this is a populist issue that can be spun as pro-safety, pro-jobs, and pro-environment. Personally, I am pro all those things. I also get that NAFTA as a whole is not particularly popular at the moment. But, can we take a step back and look at this legally? The U.S. (via President George H. W. Bush) agreed to let the trucks in. Are we going to live up to our word? Maybe not. If not, there will be consequences.
This is what Article 2019 says:
If in its final report a panel has determined that a measure is inconsistent with the obligations of this Agreement or causes nullification or impairment in the sense of Annex 2004 and the Party complained against has not reached agreement with any complaining Party on a mutually satisfactory resolution pursuant to Article 2018(1) within 30 days of receiving the final report, such complaining Party may suspend the application to the Party complained against of benefits of equivalent effect until such time as they have reached agreement on a resolution of the dispute.
What this means is that if we fail to implement this (again), Mexico might finally get fed up and decide to retaliate. If that happens, U.S. exporters or service providers benefiting from NAFTA in Mexico might lose those benefits up to the point necessary to offset the loss to Mexico. Under Article 2019(2), the penalty should first affect the same sector if practical. So, this may be a lousy time to be a U.S. transportation or logistics company operating in Mexico.
It's been a while since we have had a good old fashioned trade war. But it seems like the wind might be blowing in that direction.
Monday, September 10, 2007
Back in 1994, the U.S. agreed to eliminate this obvious choke point in the supply chain by giving Mexican trucks the right to make deliveries throughout the U.S. in the same way Canadian trucks do. It's right there is the agreement as part of Chapter 12 which states, at Article 1202:
Each Party shall accord to service providers of another Party treatment no less favorable than that it accords, in like circumstances, to its own service providers.
The treatment accorded by a Party under [the above] paragraph means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to service providers of the Party of which it forms a part.
That means that Mexican truckers who follow essentially the same rules as U.S. truckers, get to provide trucking services in the U.S. Yes, the true standard is "treatment no less favorable than" that accorded U.S. truckers, but as a practical matter that usually means the same.
Funny thing, Mexico, until now, never got access to American roads. The Agreement was the subject of law suits dealing with everything from the environmental impact of the additional trucks to the the relative safety of Mexican versus U.S.-based trucks. An odd assortment of interests from the Teamsters to the Sierra Club tried to stop the Agreement from being implemented. In 2001, a NAFTA Arbitration Panel held that:
On the basis of the analysis set out above, the Panel unanimously determines that the U.S. blanket refusal to review and consider for approval any Mexican-owned carrier applications for authority to provide cross-border trucking services was and remains a breach of the U.S. obligations under Annex I (reservations for existing measures and liberalization commitments), Article 1202 (national treatment for cross-border services), and Article 1203 (most-favored nation treatment for cross border services) of NAFTA. An exception to these obligations is not authorized by the “in like circumstances” language in Articles 1202 and 1203, or by the exceptions set out in Chapter Nine or under Article 2101.
The Panel unanimously determines that the inadequacies of the Mexican regulatory system provide an insufficient legal basis for the United States to maintain a moratorium on the consideration of applications for U.S. operating authority from Mexican-owned and/or domiciled trucking service providers.
That decision was not enough to get the trucks rolling either. It is not entirely clear whether there was a single factor that got this moving. But, the pilot program is starting and Chicago, apparently, will be one of the first metro areas to see Mexican license plates on cargo trucks. Here is a Tribune story on the topic.
So, what does one do with this information? Assuming you can find a trucking company willing to participate in the pilot program, the question is whether it makes sense to forgo the El Paso, Laredo, San Diego, or other distribution center and drop ship to your big customers in Massachusetts or Oregon (to pick random locations). It might. But, it might also upend long-term contracts with warehouses and other service providers. It is, however, one of those developments that raises questions worthy of consideration by traffic and transportation managers.
UPDATE: North Dakota Senator Byron Dorgan has moved to block appropriations for the Mexico truck pilot program. Here is his press release. Dorgan points to the "spectacular crash" of two trucks in northern Mexico on Monday as evidence that the program will increase the danger to Americans. The apparent implication being that there are no sleepy, over worked, and under trained truckers in the U.S. like here or here.
Wednesday, September 05, 2007
Buying Trouble: Avoiding Purchasing and Outsourcing Traps in Customs, Trade and Export Laws
Tracks: Customs/Trade, Corporate/Finance, Corporate Counsel
Corporate outsourcing of manufacturing and services is growing rapidly. Many American and European companies have expanded their purchasing horizons to include unfamiliar suppliers and service providers in possibly unfamiliar countries. Companies new to international procurement, including companies outsourcing production and service functions previously done in-house, face a complicated array of legal questions and compliance hurdles. These range from establishing the proper customs value for imported merchandise to avoiding violations of the export control laws by the disclosure of regulated information. This seminar will provide an overview of the issues and practical advice on minimizing liability in the expanding global marketplace.
Co-Sponsoring Committees:Customs Law Committee, International Corporate Counsel, and International Trade, Export Controls & Economic Sanctions Committee
Lawrence M. Friedman (Moderator), Barnes Richardson & Colburn, Chicago, IL
Milton B. Whitfield (Speaker), Haynes and Boone, LLP, Washington, DC
Darryl Jackson, Assistant Secretary of Commerce for Export Enforcement, US Department of Commerce, Washington, DC
Paul Gray (Invited), Chairman, HM Revenue & Customs, London, England
Dalton Albrecht, Miller Thomson LLP, Toronto, Canada
Tim Hesselink, Simmons & Simmons, Rotterdam, Netherlands
I'm behind on blogging some interesting CIT opinions. I'll try my best to get to those soon. Not much else of interest has happened. For those of you in the business of importing items controlled by Fish & Wildlife under the Convention on the International Traffic in Endangered Species, here is a 94 page Federal Register notice to sink your claws into.
One other point of note, CBP announced that it is ending the Supplemental Information Letter process but continuing the Post-Entry Amendment process. This may not mean too much as the two things had effectively merged into on form called an SIL/PEA. Under the revised program, PEAs are due no less than 20 days before the scheduled liquidation.
Hope that is enough to keep you happy for now. More to follow.