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Reposted from the OneAmericaCommittee blog

The Pacific Inland Import/Export Corridor goes under a number of names, such as the "Mid-Continent Trade and Transport Corridor" when promoted by the North American SuperCorridor Coalition (NASCO). As a regional economist, a glance at the transport corridor map displayed by NASCO revealed that organized labor is a primary target.

This is not news ... indeed, it was through the blogoshphere that I learned of this Union-busting Superhighway. What this diary is concerned with is the possible coalition that can be built in opposition to this transport corridor. Therefore, it focuses in detail on all the reasons why the Pacific Inland Import/Export Corridor is very bad public policy, and then considers some constructive "rerouting" and redesign of the corridor in support of America's Energy Independence and, therefore, in support of America's Economic Independence.

The sea ports in the transport corridor are on the Mexican Pacific coast.  These are matched with "inland ports", in which goods that have entered the country under bond can clear customs.  This is quite clearly not in support of trade within NAFTA.  Rather, the purpose is to unload cargo containers from regions like China and Southeast Asia at a non-unionized port.  From there, they travel to Monterrey, where they are driven to clear through customs at an "inland port" and on to their final destination by non-unionized, low wage, Mexican truckers.

Ideological Attacks Lead to Bad Designs

An effective transport corridor is a complex system.  It is hard enough to design an effective transport corridor when the focus is on effective transport.  When the primary basis of the design is an ideological attack on organized labor, serious flaws should not surprise anyone.  In this particular case, the corridor is bad for the US economy and US energy independence.  Even worse, for something that is supposed to have a "North American" emphasis, it is bad for the North American economy and energy independence

The Pacific Inland Import/Export Corridor and US Economic Independence

"Free trade" is controversial because the term can stand for two very different situations.  In the first, two countries specialize in what they do best, and trade at fair terms, and both win as a result.  In the second, "free trade" means freedom for corporations to plan economic relations between countries, without any need to take the needs of the citizens into account.

This is why opposite sides in the free trade debate sound like two sides arguing past each other.  Supporters of free trade argue in favor of the first situation.  Opponents argue against the second.  And to a substantial degree, they are both right.

NAFTA is biased toward the second situation - "trade free of public responsibility".  A good indicator is the fact that most of the agreement focuses on freedom to move wealth, with only about one-fifth actually focused on trade.

A close look at the Pacific Import Corridor show what type of free trade it is supporting.  The "inland ports" are aligned along the super-highway.  This allows container traffic brought up by truck to be passed through customs and loaded for entry into existing east-west Interstate system.

How do we know that this system is not focused on Mexican products bound for the US?  There already exist multiple trucking routes from Mexico into the center of the country, with existing customs facility.  If the purpose was to improve transport for trade between the US and Mexico, it would be far more efficient to improve maintenance of the existing Interstate Highway system.

What the Pacific Import/Export corridor does is provide points of entry for products passing through Mexico under bond.  That is, the road corridor is for products imported from elsewhere, without any value added in Mexico at all.  Mexico's sole contribution is to provide non-unionized dock workers and truck drivers.  And that also explains the location of the corridor, as far from the coasts as possible to ensure that it will attract container freight.

There are rail lines provided for outside the main corridor.  These bypass several of the inland ports of entry.  Therefore, the primary purpose is for exports.  The rail corridors terminate in Winnipeg and Windsor, which ties into the heart of the eastern and western Canadian rail networks.  It is reasonably clear that the purpose is to transport primary products, like coal, iron ore and timber, needed by China and Southeast Asia.

The economic strategy implied by this Pacific Import/Export Corridor?  North America is hewer of wood and drawer of water, and imports manufactured goods from elsewhere.

The Pacific Inland Import/Export Corridor and US Energy Independence

The core of the proposal is to build a freight express corridor, to bring freight from the Mexican Pacific ports to "inland ports" at:
* San Antonio (Interstate 10);
* "Alliance" Texas (Interstates 35, 20, and 30);
* Kansas City (Interstate 70); and
* Winnipeg (Canadian Highway 1).

The US relies on imported energy for 27% of its energy needs, and the present high crude oil prices seem more likely to rise than to fall over the next decade.  The most energy efficient way to move containers long distances overland to a limited number of "inland ports" is rail.  Trucks, of course, are far more flexible for shorter distances and for more broadly dispersed destinations.

This means that the best combination of energy efficiency and flexibility is mixed-mode transport, with containerized freight moving from ship to rail to truck.

The question must be asked: why a Super-Highway as the freight express corridor?  And the answers seem reasonably clear.  Trucking Asian goods in from Mexico allows the "big box" retailers such as Wal-Mart to establish wholesale and distribution centers in Mexico. Loads for individual stores may be loaded into trucks bound for individual stores.  At the same time, the number of trucks that would be operating out of the collection points in Mexico ensures that the Mexican trucking firms will fight against unionization of truck drivers with all means at their disposal.  Mexican railway workers, with the higher skill requirement combined with history of stronger unions, are a less attractive prospect.

A Positive Step Forward: The Inland Rail Expressway

Supporters of the Pacific Inland Import/Export Corridor hold many advantages.  Indeed, several components of the Pacific Inland Import/Export Corridor have already been put into place.  Opposition alone will at best blunt this attack.  However, even when it is too late to reverse course, it may still be possible to steer future development in a better direction.

In this task, opponents hold one substantial advantage: the corridor plan being promoted is a very bad design. It is a money-wasting exercise in energy inefficiency focused on selling primary products to East Asia in return for manufactured goods.  This is completely over and above its primary role as a direct attack on organized labor.

Since it is a bad design and will cost far more than can be justified, it is relatively straightforward to offer an improved design - and in a single stroke remove the heart of the anti-union strategy:
* Entirely eliminate the road component from the design - in other words, support the ban on new highway construction, and spend the Highway Trust Fund on repairing, maintaining and improving the existing Interstate Highways;
* Re-route the Southern Terminus of the system to Mexico City; and
* Redesign the rail infrastructure for intra-NAFTA trade and travel.

This alternative design is what I refer to as the NAFTA Rail Expressway. Heading to the center of Mexico instead of to the Pacific Ports, it is focused on constructive engagement with Mexico.

Originally posted to BruceMcF on Sun Aug 06, 2006 at 09:24 AM PDT.

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Comment Preferences

  •  Try posting this over on (0+ / 0-)

    ...Texas Kos.

    This superhighway up the gut is a big issue for them.

  •  A respectful counterargument (2+ / 0-)
    Recommended by:
    raster44, grassrootsbloggerdtcom

    Thank you for this diary.  I raise the following points not to snark/troll but to strengthen and refine the reasoning in the diary and to promote

    Regarding the use of (presumably unionized) Mexican labor, isn't the use of that more plentifull resource an example of efficient comparative advantage?  

    In other words, why should the truck drivers of northern Mexico get blocked from earning wages under this agreement?  

    Why precisely should inland schoolteachers, factory workers and bus drivers pay more for good so that the several dockworkers unions - with a near cartel on port services that would be prosecuted by the Department of Justice were it a lock on physical capital and capacity rather on than labor - get 100% of the port handling business in the United States?

    A snapshot of the Mexican economy:

    Mexico still needs to overcome many structural problems as it strives to modernize its economy and raise living standards. Ongoing economic concerns include low real wages, underemployment for a large segment of the population, inequitable income distribution (top 20% of income earners account for 55% of income), and few advancement opportunities for the largely Amerindian population in the impoverished southern states. If municipalities of Mexico were classified as countries in the HDI World Ranking,San Pedro Garza Garcia, and Benito Juárez, one of the districts in the Distrito Federal, would have a similar level of development to that of Italy, whereas Metlatonoc, Guerrero, would have an HDI similar to that of Malawi.

    From the standpoint of the imbalance of wages between the U.S. and Mexico, one can either say that Mexican workers overall are paid too little, too much or neither/don't care.  If Mexican workers are paid too little, encouraging trade through Mexican truckers raises wages and net Mexican income, some of which will be spent here, particularly for northern Mexican wage-earners.  If U.S. workers are paid too much, then loosening labor market monopolies or near monopolies will provide cost-efficient competition both in Mexico and in the inland ports to the monopoly rent-seeking Longshoremen's Unions.  If they are paid just right or it doesn't matter, then it doesn't matter.

    You have studied this issue more than have I; there may well be some links to outside materials that strengthen your case, but there were none in your diary.  Notwithstanding my challenges above, thank you for putting this diary out.

    •  Excellent points ... that's what Fair Trade vs .. (0+ / 0-)

      ... Free of Responsibility Trade is about.

      The trucking of goods instead of sending goods by rail is energy inefficient and labor intensive ... but in terms of the total value added to the goods, most of that is done by labor in China and SE Asia.

      A fair trade system would, indeed, tap relative or "comparative" advantage, and when you tap comparative advantage under conditions of balanced trade, that is likely to be good for both sides ... as long as both sides have the freedom to say "no" to any given deal on offer.

      However, this is not about comparative advantage trade. It is about absolute financial advantage trade, where there is no reason to expect both sides to gain ... or indeed, not necessarily any reason to expect the workers in either side to win.

      Indeed, I don't write it up, but it may well be union-busting in Mexico as well, since a heavily subsidized road corridor places pressure on the rail union in Mexico.

      Indeed, I would argue that Mexico would certainly gain more employment opportunities from the route diversion ... and since far more of the value added would be produced within Mexico itself, with far greater benefit to US firms who export goods to Mexican Industry and Mexican Consumers.

    •  Oh, and on cheaper goods in the Great Plains ... (0+ / 0-)

      ... I am going to go back to the point that it is an economically dubious decision to provide massive subsidies to shift traffic onto long-haul, high volume trucking, which creates far more exposure to crude oil prices for people in the middle of the country than a rail-based system would do.

  •   fine posts (0+ / 0-)

    Thank you both, great posts.

    What is clearly illustrated is the need for very broad  and transparent conversations about the issues raised.

    Honest in-depth dialogue.

    What can we do with our political ( decision-making) systems so that there is more of that?

  •  This diary rests on several false premises. (2+ / 0-)
    Recommended by:
    raster44, tbrucegodfrey
    1. The "longshoreman's union" isn't the power in the Pacific Coast ports. The last job action there was not a strike but a lockout by the Pacific Maritime Association, an umbrella organization that hires workers at 29 ports.
    1. Port labor costs are no longer the issue they used to be, thanks to the invention and take-up of the 40-foot shipping container. One crane operator replaces untold numbers of longshoremen.
    1. In terms of container volume, the Port of Los Angeles and Long Beach dwarfs anything on Mexico's Pacific Coast. Consider the Port of Lázaro Cárdenas:

       Last year [2004], Lazaro Cardenas, located in a city of the same name, moved 43,400 20-ton equivalent units (TEU). The port plans to add a new terminal, which could boost its container capacity in 12 years to 1.8 million TEUs. Today, all of Mexico's ports combined move 2 million TEUs annually. "This is a market that cannot grow too fast because it would mean taking cargo from other ports and rerouting them to Lazaro Cardenas, but this is just the beginning" says Armando Herrera, commercial manager at the port. "The important thing is that we make our projections based on real programs."
       Lazaro Cardenas is expected to handle over the next few years cargo that would otherwise arrive at overworked U.S. ports, such as Long Beach and Los Angeles, which together move 10.2 million TEUs a year.

    And remember, there are 29 PMA-staffed ports on the West Coast.

    I appreciate the feeling that went into this diary, but I'm calling CT here.

    •  Your post reflects a general need at DKos (0+ / 0-)

      which is for people - like yourself, and in fairness the diarist - who have done some meaty study of substantive issues.

      I am not an economist, or a union organizer, or a forester, etc. Only thing I know anything real about is lawyering in Maryland/DC, and maybe something about public transit due to my own personal interests.

      I would love to see the DKosipedia become a greater resource or, ideally, become more integrated into DKos at a whole.

    •  What? (0+ / 0-)

      Are you saying that the Teamsters don't have any members among the nation's truck drivers?

      •  Non sequitur. (0+ / 0-)

        Worth nothing, though, that the Brotherhood of Locomotive Engineers became part of the International Brotherhood of Teamsters on Jan. 1, 2004.

        •  Yes, I noted that ... (0+ / 0-)

          ... I would hope that it would make it easier for the Teamsters to support the NAFTA Rail Expressway.

          But I don't know ... I'm not sure how one would get in touch with the Teamsters to find out what their feelings are on the issue. I do get the vague impression that in general they tend to prefer the highway trust fund spent on fixing the present rapidly deteriorating Interstate Highway system, rather than being diverted to build new ones that won't be maintained.

        •  I'm reading that as worth noting n/t (0+ / 0-)

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