Infrastructure Improvements Needed to Reinvigorate Trade

E-newsletter Issue #81 | Oct. 27, 2011

Trade among the three countries of North America has tripled since the North American Free Trade Agreement took effect 17 years ago.

That robust increase, however, belies some of the obstacles to cross-border trade in the continent, with inadequate or antiquated infrastructure near the top of the list of concerns of businesses and governments.

“As a region, our importance is actually becoming diminished relative to other trading blocs in the world,” said Diane Gray, president and CEO of CentrePort Canada.

“We’ve spent a lot of time resting on our laurels when it comes to the NAFTA environment.”
The path to reinvigorating it, she said, is a renewed commitment to improving the continent’s infrastructure.

But Canada, along with the U.S. and Mexico, is taking steps to clear that path, Gray said Saturday, Oct. 22, during The Council of State Governments 2011 National Conference and North American Summit.

Canada, for example, built its first-ever tri-modal inland port, which was built and is operated with the goal of facilitating export-oriented activity. 

The Winnipeg-based CentrePort Canada, which is hundreds of miles from any ocean, is a port at the geographic center of North America. With its trucking center, rail lines pointing in every direction and its proximity to Canada’s busiest cargo airport, CentrePort connects businesses to North America and the world. 

Because the inland port is designated as a foreign trade zone, businesses can clear customs there and have import duties waived.

Along the U.S.-Mexico border, 70 percent of the trade between the two countries relies on trucks, as well as the highways that move the trucks’ freight across the border. 

 “Trade between Mexico and Canada has grown exponentially,” said Sean Carlos Cazares Ahearne, Mexico’s deputy director general for border affairs, “but growth of our border facilities has not.”

One problem is that the ports of entry are land-locked; they are in the middle of large cities with little or no room to expand.

But Ahearne said the U.S. and Mexico have made progress. In 2010, for the first time in history, the two countries opened three new border crossings in the same year, and they have also announced that the first cross-border railway is being built in more than a century. Upgrades to existing crossings have begun as well, and U.S. and Mexican officials are working together on a new 21st Century Border Management Agreement.

States, meanwhile, can play a key role in maintaining the U.S. infrastructure. With fiscal pressures at all levels of government, state officials are looking for alternative financing approaches, including the use of new public-private partnerships, or P3s.

Ryan Pedraza, program manager for the Virginia Office of Transportation Public-Private Partnerships, said engaging the private sector has given Virginia new ideas for projects and ways to finance them under the state’s 16-year-old Public-Private Partnership Act.

But, Pedraza added, for P3s to work, “the public sector needs to be prepared to make an investment to get the projects going.”

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