With international trade rhetoric ramping up in this election year farmers on both sides of the border, U.S. and Mexican trade officials, and academics and political analysts are wondering what the future holds for agricultural trade with our southern neighbor?
The issue points to growing problems that currently exist at border land ports that are now shadowed by political controversy, which could potentially create additional adversity in the years ahead.
In spite of election-year negatives and cross-border trade challenges, a special research team sanctioned by the USDA’s Economic Research Service has recently conducted an extensive study to determine how the process of moving agricultural products across the border can be enhanced and improved.
A team of nine researchers from both the U.S. and Mexico were charged with evaluating and recommending how to streamline the import/export of goods across the border, especially at busy land ports, in both a more efficient and secure manner in an effort to facilitate the increasing volumes of food and commodity products passing between the two nations.
To facilitate the study, the research team conducted about 80 interviews with people in the private sector, in government and the academic world in both the United States and Mexico who are familiar with bilateral agricultural trade and the processes involved in regulating trade at the border. Interviewees included professionals employed by exporters, importers, customs brokerages, and industry associations, as well as owners of firms involved in the international trade industry.
Unstacking the border
Specifically, the research team was concerned with the increasing problems at the border which have served to impede bilateral agricultural trade as traffic headed in both directions has stacked up as a result of regulatory processes, inspection procedures, and extensive paperwork. Researchers determined Mexico and the United States must look to means other than tariff and quota elimination if they are to foster further growth in trade.
Improving border infrastructure is one approach to the challenge. But such streamlining must also maintain appropriate measures for food security and the regulatory process, so the interviews were designed specifically to gather ideas on ways to improve of moving products across the border.
The study reveals the border crossing and inspection process is a critical control point in the shipment of agricultural goods. According to the study, these problems impede the flow of agricultural trade, leading to higher transaction costs, slower transit times, and even outright losses of product due to spoilage or slippage. Based upon information from interviews, the research team was able to identify six possible categories of opportunity for making U.S.-Mexico agricultural trade more agile.
The conclusions and solutions include:
1.Agriculture-related aspects of border crossings and inspections. Respondents emphasized that both government and the private sector have roles in making the border work. Government must be able to conduct inspections consistently, both over time and at different ports of entry, to discourage port-shopping by shippers and to ensure meaningful inspections. Inconsistency could be addressed by direct supervision of inspectors and product-specific training. Personnel must have the specialized knowledge and skills—such as identification of insects, collection and testing of samples, and familiarity with all agricultural product standards—for carrying out inspections.
The private sector, in turn, requires complete and accurate documentation about the products it trades from one country to the other. Such documentation is indispensable to passing inspection, the functioning of risk-based screening tools, and investigating outbreaks of foodborne illnesses. In addition, the private sector must ensure that traded agricultural products remain in optimal condition from origin to destination.
2. Pre-clearance and pre-inspection systems and joint inspection facilities. The design of U.S. and Mexican inspection operations already reflects creative approaches to locating some aspects of the inspection process away from the border. The study identified a joint U.S.-Mexico joint inspection facility in Tijuana, Baja California, adjacent to the U.S. port of entry. A model for successful joint cooperation, a 180-day pilot project proved successful in speeding import/export traffic and procedures and subsequently improved the movement of agricultural good headed in both directions.
3. Further development of risk-based inspection systems. In a risk-based inspection system, the allocation of resources to specific inspection activities, including the type and frequency of inspections, is guided by an assessment of the likelihood and severity of the risks associated with the products subject to inspection. Examples of such systems include: the National Agriculture Release Program (NARP) operated by USDA’s Animal and Plant Health Inspection Service (APHIS) and U.S. Customs and Border Protection (CBP); the Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting (PREDICT), operated by the U.S. Food and Drug Administration (FDA); and the Integral System of the Inspection Service (SISI) and Trusted User (UCON) program, both operated by Mexico’s National Service of Agri-Alimentary Health, Safety, and Quality (SENASICA).
4. Advance preparations for new transportation facilities and new shipment routes. The construction of new transportation infrastructure and the development of new inland shipping routes can lead to disproportionate growth of U.S.-Mexico agricultural trade across ports of entry, affecting the demand for inspection services. Completion of a new toll road linking the Mexican cities of Culiacán and Durango and faster growth in fruit and vegetable production in central and eastern Mexico than in western Mexico have led to a larger share of produce imports from Mexico entering through the ports of entry in Laredo and Weslaco, Texas. Emerging trade patterns can be anticipated by the U.S. and Mexican Governments as they adapt their border operations to changing economic conditions. Respondents felt that the two governments could work in advance to develop the logistics and inspection protocols needed at the new facilities and to prepare for possible shifts in trade volumes across ports of entry.
5. Complementary activities for Single Window Environments. Both Mexico and the United States have created Single Window Environments—electronic systems that allow parties involved in international trade to enter all the information needed to satisfy import, export, and transit-related regulatory requirements at a single point. Some respondents suggested that the two governments could use these systems as platforms for streamlining and simplifying the administrative requirements for bilateral agricultural trade. This effort could include not only the completion of ongoing projects for instituting electronic certificates for the full range of agricultural products, but also the consolidation or elimination of some types of documents and increasing the period of validity for certain documents. Electronic certificates (E-certs, for short) are electronic versions of veterinary inspection certificates, phytosanitary certificates, and similar documents that formerly were issued only in paper form.
6. Creation of formal avenues for regulatory innovation. Formal avenues for innovative feedback on regulatory processes would help to enact many of the ideas proposed in interviews for making U.S.-Mexico agricultural trade more agile. For example, many interviewees suggested that there are opportunities to reduce the time required to sample and test agricultural shipments, chiefly by locating labs closer to the border. Already, the FDA has several mobile labs and deploys them at ports such as Nogales during peak import seasons, and the Mexican government uses mobile labs to analyze pathogenic microorganisms and toxic residues. Aligning border facility hours more closely with the private sector’s operating hours would be welcomed by interview participants, some of whom envision a border that is open to agricultural trade 24 hours a day, seven days a week—a measure not without tradeoffs in costs, staffing, and quality of inspections.
The research team submitted their report summary recently and a full report is being developed for distribution to trade and government officials in both countries for consideration and possible implementation.