Introduction

The first of NAFTA's stated objectives is to "eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between" the Parties. This goal is being accomplished as the various provisions of the NAFTA are phased in which eliminate duties, harmonize procedures, recognize standards as equivalent and encourage the exchange of information. In addition, the NAFTA created some two-dozen working groups, committees and subcommittees to advance the objectives of the Agreement. Article 316.3 emphasizes the importance of facilitating trade in goods and provides a means for ensuring that, as the NAFTA is implemented and as its various working groups meet, sufficient communication takes place to assure that the common goal of facilitating the cross-border movement of goods is undertaken in a comprehensive, coordinated and efficient manner. This report was prepared by the NAFTA Committee on Trade in Goods (TIG), with input and review from other NAFTA working groups and committees. Its purpose is to describe the various issues that are related to the cross-border trade in goods, and to summarize how these issues are being managed through the NAFTA or other processes.

Dimensions of Cross-Border Trade in Goods

This section describes the range of laws, regulations, and physical constraints that goods crossing a border from one NAFTA country to another must meet.

1. Border Inspection Facilities

Cross border trade is limited to ports of entry. Customs processing, inspection by one or more regulatory agencies, and the physical transit of goods occurs at these ports. The border between United States and Canada has 75 roadway and railway ports of entry, while Mexico and the United States have 22 such ports. Goods also enter though seaports in each country. A majority of NAFTA cross-border trade travels by truck. For Mexico and the United States, this accounts for about 80 percent of goods trade, for the U.S. and Canada it is approximately 68 percent. The same types of entry processing occur at land and sea ports; however, there are important differences in the nature of trade in each. Goods transiting through land ports are overwhelmingly trade originating or destined for a NAFTA country, while at seaports the origin and destination of trade is much more diverse. Land ports also process very large numbers of people each day. While this activity is beyond the scope of this exercise, it has a major influence on the operation of land ports. As the following table shows, border crossings by commercial vehicles (trucks and buses) which have been most directly affected by NAFTA provisions, have increased substantially since 1993, with a 37 percent increase between the United States and Canada and a 68 percent increase between the United States and Mexico. Crossing by pedestrians and private vehicles, which were by and large unaffected by NAFTA provisions, declined slightly overall. Substantial enhancements to border infrastructure are underway. For the U.S.-Mexico border, three new bridges are under construction. This includes Los Tomates-Matamoros III, with a

scheduled opening date of April 30, 1999; Eagle Pass- Las Piedras Negras II, scheduled to open in July 1999, and Laredo IV-Nuevo Laredo III, scheduled to open in early 2000. There are also plans to expand the San Ysidro-Tijuana border crossing and to install a dedicated Commuter Lane there. The Port of Brownsville obtained a Presidential Permits in 1997, and there is interest in another rail bridge at Laredo. The U.S. inspection agencies have come to an agreement in principle on an Anzalduas bridge, but no Presidential Permit has yet been issued. Along the Canada- US border, several bilateral initiatives are underway. Joint construction of border facilities can also increase the efficiency of border processing, as has been demonstrated by the Canada- U.S. customs and immigration facility at Coutts, AlbertaSweetgrass, Montana, which is expected to be completed in Spring 2002. There are five other joint/shared facilities slated for completion by Fall 2003. A commercial vehicle staging area on the Canadian side of the Fort Erie/Buffalo border crossing will reduce congestion by removing trucks from the Peace Bridge while their documents undergo initial review. Border Crossing Statistics (This link opens a new window) Source: U.S. Customs. Data for fiscal years (October-September) Coordination and consultation on matters related to bridges and border crossings are the responsibility of the State Department in the United States. These agencies take the lead in coordinating the participation of other federal agencies, state and local government, and the private sector. Twice-yearly interagency Binational Group on Bridges and Border Crossings meetings are held with the Mexican government. Representatives for State, Commerce, the United States Department of Agriculture (USDA), the Environmental Protection Agency (EPA), Customs, the Government Services Administration (GSA), the Immigration and Naturalization Service (INS) and the U.S. Department of Transportation (DOT) attend for the United States. Canadian officials from the Departments of Revenue Canada, the Department of Foreign Affairs and International Trade (DFAIT), Citizenship & Immigration, Transport and Agriculture Canada also attend these meetings. Border infrastructure planning and resource allocation also has a domestic review process in each country that is largely beyond the scope of this exercise.(1)

2. Standards/labeling
International trade in goods begins not at the border but at factories, farms, forests, fisheries and mines. Facilitation of trade should begin here as well. As the NAFTA recognizes, each Party may adopt, maintain or apply measures related to safety, protection of human, animal or plant health, the environment and consumers. This includes the ability to ensure that goods entering its territory comply with such measures. Without reducing levels of safety or protection, the goal of the NAFTA is to make standards-related measures compatible, to the greatest extent possible, to facilitate trade in goods. A number of working groups, committees and subcommittees are addressing these issues and facilitate cross-border trade in goods. A summary of the activities of each follows: 3. Border Inspection A third set of cross-border issues revolve around the inspection of goods, documents and conveyances in order to allow goods to physically cross the border. Such activity occurs in

the infrastructure described at the outset of this report, but while this "hardware" provides the setting for much of the inspection activity, a variety of federal, state and local agencies provide a complex set of "software" that does the actual processing. A substantial difference between the entry procedures of Mexico on the one hand, and the United States and Canada on the other is the ability to release goods at the border separately from the completion of the necessary paperwork and fee matters. The United States and Canada use a system of bonds and securities which allow goods to be released at the border and settlement of any additional information, duties and taxes required to occur later. Mexico does not use a bonding system, by and large, so all formalities must be completed before goods are released. The processing of goods at ports of entry is performed by the three Customs services. For the United States, U.S. Customs reviews documentation and examines goods on behalf of all Federal regulatory agencies (current for 45-55 agencies and covering over 400 regulations) to ensure merchandise meets all requirements for admission and does not contain hidden narcotics, other contraband or prohibited merchandise. For Canada, a similar structure is in place where Revenue Canada, who is responsible for the Customs and Trade Administration function, ensures compliance with some 60 Acts ranging from health and safety concerns to statistical gathering. Other government agencies for which the border is a major concern includes Canadian Immigration, Agriculture, Health and policing agencies with respect to contraband concerns. At most ports on the U.S.-Mexico border and at a few U.S.-Canada ports, Animal and Plant Health Inspection Service (APHIS) personnel are present to inspect agricultural products. Entry of cattle, horse, birds and certain other animals is limited only to ports with APHIS staff. Representative of some U.S. state agriculture agencies maintain a presence adjacent to Customs facilities. Agricultural products entering Canada may be inspected by officials from the Canadian Food Inspection Agency to determine that these products meet Canadian phytosanitary and sanitary requirements. In the U.S., the Federal Highway Administration inspectors perform targeted truck safety inspections at or near U.S.-Mexico ports of entry; sometimes this occurs within U.S. Customs Service import lots. State transportation agencies also maintain a presence at ports to enforce state regulations. In Canada, inspections are done at the provincial and municipal level. Most ports of entry have on-site immigration officials. For the United States, Immigration and Naturalization (INS) officials are cross-trained with Customs staff on the initial regulatory requirements for entry into the U.S. 4. Customs Administration A great deal is involved in processing the entry of goods in addition to that done at ports of entry. Through the NAFTA and other initiatives a number of bilateral and trilateral efforts are underway to address these matters. A short status report on each follows.
NAFTA Working Group on Rules of Origin:

The NAFTA put into place comprehensive, and often complex, rules of origin to determine which goods are eligible for NAFTA tariff preferences and other benefits of the agreement.

The work group's mandate is to ensure consistent application of the rules governing trade in goods and to revise the rules when all three parties agree. There is substantial opportunity to simplify administration of the rules, clarify regulations, resolve problems, and in some cases liberalize rules, especially where subsequent trade liberalization has occurred on a multilateral basis. To date, the NAFTA process has implemented significantly simplified and liberalized rules for chemical products and two sets of technical rectifications to conform the rules to changes in the tariff schedules and is close to agreeing to a third set of rectifications which would include changing references to tariff items in the rules of origin from a country specific to a generic format.
NAFTA Customs Subgroup:

Created to harmonize customs procedures, the group resolves tariff classification issues, sets out principles and increases transparency for audits, and is exploring simplification for the NAFTA certificate of origin. Outside the NAFTA, a trilateral Heads of Customs Conference meets regularly. Some of its initiatives have been to create working groups on: enforcement, automation, and laboratory methods. Other achievements include a trilateral web-site and coordinated compliance seminars for the public. Work in progress includes a prototype for a new express air courier system and a common electronic entry "document." On a bilateral basis, the United States and Canada have plans to reduce the number of customs stops for in-transit cargo from four to two. This will eliminate some 300,000 processing stops annually on the New York State-Ontario-Michigan alone saving truckers millions of dollars without compromising border security. Dialogue continues of the use of transponders in the import process to arriving goods from Canada entering the U.S. 5. Immigration While the focus of Article 316.3 is on the trade in goods at the border, the NAFTA does contain provision on the temporary entry of business persons. The NAFTA Temporary Entry Working Group was established under Chapter 16 to consider implementation of temporary entry provisions, to develop measures to further facilitate temporary entry of business persons on a reciprocal basis, and other proposed modifications or additions to Chapter 16. Achievements of this working group to date include:

Publication by all the parties of information documents for business persons; Annual exchange of statistical information; Signature of a protocol for administering Article 1603(3)(b) stipulating the information to be shared when entry has been refused due to potential adverse effects on the settlement of a labor dispute; Agreement on interpretations such as the prohibition of self employment in the receiving country and allowing entry to professionals who are nationals of NAFTA parties but represent non-NAFTA firms; The development of common understandings, including agreement on how Chapter 16 can be modified; and Agreements in principle on the addition of actuaries and plant pathologists to the list of professionals.

Several Bilateral efforts are also underway:

The United States and Canada, for example, are implementing programs to expedite the clearance of low-risk travelers, recognize those travelers with a history of compliance, allowing agencies to focus on high-risk travelers. Known as CANPASS in Canada and INSPASS and PORTPASS in the U.S., are being implemented at selected ports of entry in both countries; The U.S. and Canada are also consulting on ongoing remote/automated permits ports which will provide round-the-clock service by 2000 to small border communities without current 24-hour service; Both U.S. immigration and customs agencies provide pre-clearance services at several Canadian airports for U.S.-bound passengers and their luggage at seven Canadian airports.

6. Other Ongoing NAFTA Activities which facilitate trade in goods There are other activities underway that do not fall into the headings discussed above, but which have a beneficial impact on trade in goods at the border.
Advisory Committee on Private Commercial Disputes on Agricultural Goods:

Trilateral government and industry advisory committee reached agreement on a recommendation for establishing a private commercial dispute resolution mechanism. The initial focus will be on perishable fruits and vegetables. Industry groups from the three NAFTA countries are currently developing specific procedures and a business plan for a privately run dispute settlement mechanism. Conclusion It therefore, appears that all the NAFTA countries share some aspect of creativity to warrant copyright protection. Where analysis of factual data could not have been expressed without some creative ability, other than simple effort and expense to compile the data, then it is possible that a court would find sufficient creativity to award copyright protection in the expression of it. There are some exceptions to the above conclusions. Even where data itself is not protected by intellectual property, US based data could become the subject of a misappropriation suit, depending on its source and the purpose of the research. This is not different in the academic environment where data resulting from research funded by private sources could, as its primary purpose be profit oriented. Furthermore, the use of US government data can also be problematic. Although as a general statement, government data in the US falls into the public domain, this is only the case where the data is generated by the federal government. The US government may still claim copyright protection if they acquired the rights from the original copyright holder. In Canada, government data can clearly be subject to copyright protection if it meets the general legal requirements. In Mexico, there is the added feature that the author, if an employee, may still hold some or all of the patrimonial rights to government generated data. 55 The application of educational exceptions, fair use and fair dealing in these instances is particularly problematic. In general, exceptions may provide some clarification about the

types of uses that may be made without permission, whereas fair use and fair dealing are generally ambiguous defenses that may be employed as per criteria determined in case law. It has been the approach of many lawyers to find the application of the fair use defense questionable on the Internet, especially where a substantial amount of content is used. Moreover, Mexican copyright law applies limitations to patrimonial rights conservatively. Moral rights in Canada and in Mexico apply to compilations and, indeed, most likely apply to databases where their selections and arrangements are sufficiently original to warrant copyright protection. Furthermore, moral rights might also apply to compilations of interpretative. Moral rights holders could technically exercise their rights if, in their opinion, their interpretative data somehow loses its integrity or if they are not given their requisite rights of association or paternity, especially where their data or content is framed. Although a technical issue, where scientific data is being recompiled in any way, requisite accreditation may be necessary, not just to protect the integrity of the new compilation but to protect the rights associated with the original compilation. Finally, US courts have examined issues concerning vicarious liability, copyright infringement, framing, hyperlinks and metatags. Framing content or deep-linking to it without indicating to the visitor from where the content is taken or without the prior authorization of the content owner could lead to liability for copyright infringement and other intellectual property rights. 55 Patrimonial rights are devided based on certain formulae depending on the existence of employment agreements and general union/labour agreements.