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U.S., Canada, Mexico Band Together to Improve Security, Cut Trade Costs

President Bush and the leaders of Mexico and Canada announced initiatives for improving port and cargo security, and minimizing trade costs.

WASHINGTON — President Bush and the leaders of Mexico and Canada said they had agreed Wednesday to a broad set of initiatives that are intended to improve port and cargo security and minimize the costs associated with trade.

Bush met with Mexican President Vicente Fox and Canadian Prime Minister Paul Martin, both of whom opposed the war in Iraq, at Baylor University in Waco, Tex., where the three said they would seek to create a “Security and Prosperity Partnership of North America” pact.

The three leaders said they would establish ministerial-led working groups to consult with the private sector to set specific goals and implementation dates. Within 90 days, the ministers will present an initial report. After that, the groups will report on a semiannual basis.

“In a rapidly changing world, we must develop new avenues of cooperation that will make our open societies safer and more secure, our business more competitive and our economies more resilient,” the three said in a joint statement. “Our partnership will accomplish these objectives through a trilateral effort to increase the security, prosperity and quality of life of our citizens.”

Among the initiatives the three governments will discuss and seek to implement as part of the pact are:

This story first appeared in the March 24, 2005 issue of WWD.  Subscribe Today.

  • Reducing the costs of trade by “liberalizing the requirements for obtaining duty-free treatment under the North American Free Trade Agreement,” including cutting costs associated with “rules of origin” on goods and establishing procedures to expedite implementation of rules-of-origin modifications.

  • Implementing a North American cargo security strategy with compatible screening methods for cargo prior to departure from a foreign port and at the first port of entry to North America.
  • Putting into place a border strategy to build capacity and improve the flow of people and cargo at North American ports.

The U.S., Mexico and Canada implemented NAFTA on Jan. 1, 1994, establishing a trade zone between the three countries that led to the proliferation of apparel assembly operations throughout Mexico as companies shifted operations to take advantage of the pact’s duty-free benefits.

In 2004, imports of apparel and textiles from Canada to the U.S. were $3.44 billion, while imports from Mexico were $8.49 billion. Meanwhile, the U.S. exported $3.28 billion in apparel and textiles to Canada last year and $4.72 billion to Mexico, according to U.S. Commerce Department data.

With the details of the agenda’s goals still to be worked out, it is difficult to weigh how the three governments might modify rules of origin and reduce trade costs. NAFTA contains a strict “yarn forward” rule of origin that requires the use of U.S. or regional yarn and fabric in the essential character of a garment to qualify for duty-free treatment in the three countries.