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Insuring their load: NAFTA opened borders to trade but did not address insurance issues that accompanied, it, according to an official.

Article Excerpt
While it has become significantly easier to move goods across the U.S.-Mexico border since the implementation of the North American Free Trade Agreement in 1994, some critical barriers to entry still remain.

In 2003, $19.7 billion worth of merchandise made its way across the border via U.S. and Mexican trucks at the Otay Mesa port of entry alone, an increase of 54 percent from 1999, the year the U.S. Census Bureau began distributing the data.

But despite the fact that nearly 85 percent of total merchandise trade between the two countries moves by way of trucks, there has been virtually no effort to coordinate insurance requirements or standards on either side of the border with respect to commercial vehicles or the cargo they haul.

According to David Snyder, the vice president of the American Insurance Association, an industry group in Washington, D.C., presenting 435 major insurance companies, the problem with NAFTA is that it opened borders to trade but did nothing to address the insurance issues that accompany it.

Two Ounces Of Prevention

"It makes little sense that under NAFTA, an 80,000-pound truck can cross the border but 2-ounce insurance policy can't," said Snyder.

There are several consequences of this lack of coordination relating to insurance standards in the United States and Mexico. First, the current system breeds insurance fraud, with carriers engaging in "policy sharing" or what amounts to the under-insurance of vehicles, according to the California Department of Insurance.

Second, it hinders the ability of U.S.-based trucking companies to effectively compete with Mexican operators, according to Armando Freire, the owner and president of Otay Mesa-based Dimex Freight Systems, Inc., which has 37 trucks and 42 employees, Dimex ships goods from San Diego to Mexico by contracting with owner-operators based in Mexico.

For trucking companies based in San...

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