INTRODUCTION

CHAPTER 1:  TRADE AND TRANSPORT IN THE HEMISPHERE

NOTICE OF READING

The observation of the transport systems from the perspective of regional integration groupings show some general characteristics of the movements of products traded in the western hemisphere, like:

1. the existence of transport systems linked to regional integration groupings, having their own peculiar institutional frameworks, regulations, and infrastructure development.
2. The independent evolution of these systems over the time, but also a strong common external influence from the world trade and sea transport systems due to the exchanges with partners external to the region.
3. The constantly increasing continental exchange flows both internal to the regional groupings and between them.

The foreseeable evolution of the continental transport systems set to service hemispheric trade should see land transport systems further develop inside the regional groups whereas trade among the groups will use sea transport routes linked to the sea transportation of trade with non hemispheric partners. This evolution means that the integration of the transport systems, a central objective of the WHTI, will guide its works toward the development of intermodal sea-land services.

This action line features three main components: the institutional coordination, the rising of obstacles to the interoperability of the various modes and the generation of a better knowledge of the reality of the flows of transport.

These action lines requires the definition of concrete work axes as they are:

1. the institutional linkage of the existent forums, by means of the definition of political, reference marks and continental agreements, and the adoption of continental solutions;
2. the rising of obstacles to the interoperability of modes through facilitation and standardization, physical continuity of the networks; and,
3. the development of a better knowledge of the reality of the of transport: flows through statistics, networks of knowledge interchange, and appropriate studies.

Other trends not discussed in this report will also have an impact on the configuration of the markets of transportation services in the hemisphere. Among those to be mentioned are: the concentration of transport service operators, both in the supply side as well as in the demand for transport services, like logistic operators, third parties, freight forwarders, NVOCCs; the increasing segmentation of the transport markets, showing the growing participation of courier type transport and specific products related services, as well as long term arrangements with manufacturers industries and distribution companies.

The purpose of this profile is to offer a synthesis of the transport systems in the Americas and to propose orientations for the working agenda of the Initiative of Transport of the Western Hemisphere - WHTI in the framework of the agreements reached at the Second Hemispheric Ministerial meeting of 1996, later on included as part the action plan adopted by the Summit of the Americas, in its second meeting, held in Santiago in April of 1998.

For the purpose of presentation, the regional transport systems are described in this profile by category of mode of transport and in relation to the existing regional economic or commercial integration groupings of the Americas. This double reference to modes of transport and economic groupings allows to highlight the current state of the adopted solutions and the relative importance of the transport modes in each environment. This way, it is possible to identify the main features of the regional transport systems and the experiences of each one of them in the perspective of trade flows within the groupings and between them.

In this approach to the description of the transport systems, the reference units are regional groupings, therefore the profile considers country groupings rather than the situation of a particular member country which is mentioned only when some national elements have a distinctive impact on the regional group, as it is the case of, for example, some infrastructures.

The panoramic vision of the transport in the continent shows a reality with which the WHTI should count: the existence of multiple regional systems that have developed their own infrastructures, operation systems and institutional frameworks, including regulatory schemes in accordance with the necessities and possibilities of each geographical and economic environment.

The developments previous to the birth of the WHTI in a way condition its own future development as a convergence body that would gather them. They are an opportunity to take advantage of each grouping experiences, and a good capital of knowledge to find solutions for the whole continental transport system.

Therefore, one of the tasks of the WHTI will consist in defining its action reach within the limits of an intervention framework that should foster the convergence toward a networked transport system in the whole hemisphere, without interfering with the subregional groupings progress.

In view of the above the present exercise seeks to attain from a very general perspective a definition of the WHTI in the following aspects of its development:

1) Institutional linkage and convergence

2) Standards linkage and convergence

3) Linkage of information networks

For this chapter and, for consistency, in the rest of the document, five regional groups of reference have been defined for the description of the commercial interchange and flows of transport: NAFTA, Central American Common Market, MCCA, The Caribbean, the Andean Community CAN and Mercosur+, that includes Chile. The composition of each group appears in the following graphic that shows the values of the exports among these groupings for the year 1996.

A)  RELATIVE SHARE OF THE TRADE AMONG REGIONAL GROUPS

The export trade among regional groups in the hemisphere shows that its relative importance with regard to the total of what is exported by each group in the region varies considerably from one group to another. For the Caribbean, the origin of the exchange intra-group represented in 1996 9% of the total exported to the continent as a whole, while in the case of NAFTA, the relationship is reversed and shows that 88% of the export of its member countries to the continent originates among them. In similar form, 93% of the exports of NAFTA with destination to the continent goes the partners of the grouping; on the other end, in the Caribbean, only 7% of the export is destined to the area. The group that better distributes the origin and the destination of the continental exports is the MERCOSUR with respectively 50% and 42%.

Source ECLAC, based on data from ALADI, Bureau of Census and Statistitics Canada

B)  MODAL DISTRIBUTION OF EXPORTATION FLOWS

The observation of the transport of the exports among regional groups in 1996 indicates that maritime transport comes in first place as to the volume of the exchange between groups while road transport is the one that dominates the exchange in terms of the value of the exported goods.

For the countries for which information in terms of value and volume by transport mode was available for the study, the year 1996 sample shows that: 79% of the traded export volume among these countries has been carried by sea, although this volume shared only 33% of the traded value. The road transport, on the other hand, with 13% of the volume, contributed to export 49% of the traded value.

In the other modes, air transport, with a minimum percentage of volume, has carried 6% of the total value; notably, rail transport performs well, due largely to Mexico export flows, with a relationship of 10% of the value and only 3% of the volume. Discarding this country, the relationship is reversed clearly for the other considered countries.

It is necessary to also mention the importance in the inland waterway system in the Mercosur, which in the future should continue growing in importance.

Source ECLAC, based on data from ALADI

C)   INTERNAL VERSUS EXTERNAL MODALITY

The observation of the modal distribution according to the destination of the exports completes the previous observations for those situations where the exchange external to the group is similar or superior to the one inside the grouping and it not only allows to confirm the importance of the maritime transport as for the volume but the one of land transport for internal export trade.

In the two following cases, of the Mercosur+ and the Andean Community, with 56% and 66% respectively of the total exported value, sea transport is the one that lends service to the biggest value of the total exported goods but is second to the road when internal trade is considered.

Source ECLAC, based on data from ALADI

This observation is probably reversed in other cases like that NAFTA’s where exports mainly go to the group of member countries, and therefore land transport, road and rail combined, has a greater share than sea transport.

D)   INSTITUTIONAL FRAMEWORK OF TRANSPORT IN THE AMERICAS

For a better understanding of the need for institutional linkage in the Western Hemisphere, it is necessary to recall the current multiplicity of government fora that analyze the transport sector and its development in the continent.

The table shows some multiple belongings as for example that of Brazil that participates of four forums in South America and of course in the Hemispheric Initiative. Apart from the considerable work load that the pursuit of the works in these multiple forums bears, it must be recalled that each forum corresponds to defined integration environments, with different characteristics: there are three full economic integration groupings (the Andean Community, the Mercosur and the MCCA); two free trade agreements (NAFTA and the Group of the Three); two economic cooperation groupings (the Association of Caribbean States and the Treaty of Amazon Cooperation) and three are essentially sectoral (WHTI, South America’s and the Southern Cone Ministerial bodies).

With a view to a potential linkage of these regions in the framework of the WHTI, this apparent complexity should not be considered as discouraging but on the contrary as a sign of the dynamism that the transport sector has in the continent and of the importance that its treatment has acquired in all the environments of the regional integration. It is in fact this localization that has allowed progress in the treatment of the member countries needs in each forum, which, although governmental, have consultation and participation mechanisms for national private sectors.

A)  DIVISION OF THE REGIONAL MARITIME SYSTEMS:

The sea transport in the American continent can be subdivided according to a delimitation of traffics and of coasts that relate to a certain homogeneity of maritime and port services, types and cargo volumes, facilities and port equipment, etc. The geographical limits of these subsystems would be given by the ports that have regional influence, including transit or transshipment movements to more than one country. They are six the identified groups according to this criteria:

1) East Coast of North America

2) Gulf of Mexico and Caribbean

3) Panama

4) West Coast of South America and Central America

5) East Coast of South America

6) West Coast of North America

This division is unavoidably arbitrary and its purpose is to enable a simpler presentation and a panoramic view of the state and trends of the continental sea transport. A deeper analysis would require more subdivisions within each zone and, in fact, there are overlapping characteristics between the different defined areas. Some ports and services show some common features from one zone to the other and having included them in a given subdivision does not make them different. Here are briefly presented, the main characteristics of each area.

1) East Coast of North America

This coast is characterized by its large traffic volumes and connections with the traffic of the north Atlantic trade with Europe.

Main ports: Halifax, Montreal, New York-New Jersey, Norfolk, Baltimore, Philadelphia, Charleston with large volume load equipment, multiple gantry cranes and a regional impact in the whole continent. This regional impact is observed in the different origins of the traffic of transshipments towards and from South America, in its exchange with Europe, as well as in the internal distribution to the United States and Canada.

Services: The large traffic volumes have attracted the biggest operators and the biggest ships in the moment, such as containerships with capacities over 3.000 Teus, that feed some north-south traffics inside the continent, including those of Central America. This is the coast with largest foreign tonnage and container movements within the continent ^(USA) and one of the edges of the biggest intra-continental traffic, the one between NAFTA and Mercosur. In this area direct line services operate weekly and even daily frequencies and compete with transshipment services to numerous countries of the Caribbean.

Foreseeable future: Sustained growth of the traffics and a growing concentration of containers services in a reduced number of ports could have a major impact in the intra-continental north-south flows.

2) Gulf of Mexico and the Caribbean:

This area is characterized by a very important internal diversity both in the services as well as in the volumes and types of traffic flows. In fact it could subdivided in three subsystems: islands of the Caribbean, the Gulf of Mexico and Central America.

Main ports: In the Caribbean, the one with more international operation volume in San Juan in Puerto Rico, among the main transshipment ports are Kingston, Jamaica, Miami, and Freeport in the Bahamas. The national ports are of medium or small size, except for US ports, and so are the operated volumes. Ports have a reduced equipment what implies in numerous cases that the ships have cranes on board what limits their capacity of transport. In the Gulf of Mexico and in the Atlantic coast of Central America, the ports dispatch essentially national traffics, with Puerto Cortés's exceptions, Honduras, and Santo Tomás de Castilla, in Guatemala that operate with cargo of other Central American countries, as well as Bronxville, South Louisiana and New Orleans in the United States, that handle also goods transshipped to and from Mexico.

In the case of the islands of the Caribbean, it is necessary to highlight that, in many cases, the reduced sizes of the economies don't justify the existence of more than one port, which enjoys a situation of natural monopoly for the transport of the country’s external trade.

Services: In the Caribbean, the services can be classified as long-shore, short-sea, inter-island and transshipment connection or relay. In fact, a large share of the transshipment movements of this area does not have either an origin or a destination within the Caribbean.

In the Atlantic coast of Central America, there is a considerable imbalance of flows, an export volume 4 to 5 times greater than import volume, while in the Caribbean traffic this proportion is reversed in favor of the imports. These imbalances affect considerably liner services freight, in both areas, and are a prejudice for countries of this subregion. The relatively reduced volumes of trade have discouraged investments in new equipment and, as a result, the efficiency of the ports has suffered.

The Gulf of Mexico is an area of bilateral exchange between Mexico and United States but it presents an own characteristic in the competition, for given products that the short-sea services have to face from rail and road transport in that trade. The port of Cartagena in Colombia belongs to the North of South America but could be included in this area due to its regional orientation reflected in the recent works to attract a bigger movement of containers.

Foreseeable future: Given the growing contenairization of the traffic flows in the region, an important increase of transshipment centers is expected in this area. It is also possible to foresee the development of services of quick ferry type, with multiple daily frequencies and load and unload equipment similar to air transport ones.

3) Panama

Considering the services of the Canal and the great cargo volume operated with an origin and destination in the whole continent, Panama deserves to be considered apart from the rest of the regional sea transport system.

Main ports: Manzanillo International Terminal, Evergreen, Balboa

Services: the case of Panama is unique as both a international trade center and a transport hub and spoke. The traffics toward both coasts of South America and those of the large east-west traffic flows conform the thick of the movement registered by the Panama Canal.

Foreseeable future: The recent privatization of the ports on both sides of the Canal and the development of a land bridge railway are new elements of a future regional importance of Panama as storing and redistribution center.

4) East Coast of South America

Main ports: Vitoria, Santos, Paranagua, Montevideo, Buenos Aires, Rosario, Bahía Blanca. This is one of the most active sea transport regions in the hemisphere. Here can be found the largest ports in South America with regional influence in more than a country. The recent privatization processes in Argentina, Brazil and Uruguay have allowed important increases in the efficiency of the operation and a considerable fall of the port costs besides counting with sea transport tariff much more favorable that in the Pacific coast of South America in the exchange with the northern part of the continent.

Services: The biggest international operators are in this area of the Mercosur that lies from Vitoria in Brazil to Bahía Blanca in Argentina. In this area, reference has to be made to the interconnections with the Hidrovía Paraguay-Paraná that conforms the axis of a potential intense development of traffics of bulks and of general cargo for Paraguay that affects to five countries of the area (Bolivia, Brazil, Paraguay Argentina and Uruguay.)

Foreseeable future: The recent privatization processes in Argentina and Uruguay and those that are developing still in Brazil, should improve the efficiency of the operations that will accompany the dynamism of the external trade of the Mercosur. The large volumes operated in this coast should pave the way for direct services to other continents and toward the north area of the hemisphere.

5) West Coast of South and Central America

Main ports: in Chile: Talcahuano, San Antonio, Valparaíso, Antofagasta, Iquique and Arica. In Peru: Ilo - Matarani, Callao. These ports are important in size and traffic volumes at national level but not in relative terms in the regional environment.

Services: The length of the coast and the smaller population of the economies in the South American Pacific, have led to a great dispersion of traffic, and in general to small volume in each port. Total traffic of this coast amounts to a third of the import volumes and a sixth of those of export of those that are observed in the Atlantic coast of South America. Some of the most important international operators are active in the area but regional companies offering direct line services still have an important presence.

The west coast of Central America differs a lot in its characteristics from the Caribbean coast of the isthmus. Traffic of bulk is high while there is little traffic of containers and even less of general cargo, except in the case of El Salvador, none of these traffics has repercussions of regional character.

Foreseeable future: Although the efficiency of the ports has improved considerably in the last years, this coast continues has still not been able to achieve scale economies in shipping and it is expected that in the long run, in spite of the several projects of development of ports concentradores in Chile Peru and Colombia, there will be no great change in the volumes of cargo handled. This prevailing condition should remain if the current trends are confirmed toward a greater movement of the area Panama, North Pacific and the Caribbean as connections for traffic flows of this coast with those of East-West flows of the world trade.

6) West Coast of North America:

Main ports: The north of the Pacific coast presents extreme features of development of the activity, Those Angeles-Long Beach, Oakland, Seattle Tacoma, in the USA; Vancouver in Canada. These are among the busiest container ports in the world and their movement continues growing to very high rates, which leads to their necessity to continue developing new loading and unloading equipment and infrastructure and transit facilities.

Services: The services in this coast feed traffic of United States or Canada as well as those of Mexico and great part of Central and South America. Weekly and daily frequencies in some cases offered by the biggest shipping lines of the world, make of this area the gateway for goods from Asia toward the whole hemisphere.

Foreseeable future: Manzanillo, in Mexico, has promising regional importance as a concentration and redistribution container port for traffic toward the south of the Pacific coast. The other ports of this area should continue to grow following current trends. In the short run, the Asian crisis could reduce the exports of the area NAFTA to Asia, while the devaluation of the Asian currencies could contribute to an important growth of the import flows.

B)   REGIONAL INSTITUTIONS

• AAPA: American Association of Port Administrations

• ALAMAR: Latin American Association of Armadores (in recess)

• COLTRAM: Latin American commission of Sea transport (in recess)

• COCATRAM: Central American Commission of Maritime Transport

• CSA: Caribbean Shipping Association

• APTP: Association of Ports and Private Terminals of the Mercosur

In terms of physical continuity and common international applicable regulations, the following systems can be considered as land transport units in the hemisphere: NAFTA, MCCA, Andean Community and of the Southern Cone systems. This last system that has the oldest and most fruitful regional institutional framework of the continent has also been a center for the development of administrative solutions and the basis for the Andean Community as well as Mercosur’s regulatory systems. Road and railway systems are discussed separately as follows.

A)   REGIONAL SYSTEMS OF road TRANSPORT

1) NAFTA

With 71% of the value of trade between United States and Mexico, and more than 75% of the trade between Canada and its two partners, road transport is by far a dominant mode in the bilateral trade among these three countries. The NAFTA set a schedule for removing restrictions on cross-border operations and investment related to truck transport. The NAFTA access liberalization provisions will allow motor carriers to switch from a system that required transshipment or change of equipment and drivers at the Mexico-US border, to a system that would progressively allow motor carriers of one country to provide truck services, first in the other country’s border states, and by the year 2000, throughout Mexico and USA. On December 18, 1995, the date on which the United States and Mexico were to have allowed access to each other’s border states for the delivery and backhaul of cargo, the United States announced a delay in the NAFTA implementation schedule because of concerns about the safety of Mexican trucks. The countries are currently engaged in formal dispute over implementation of the NAFTA’s land transportation provisions.  This situation doesn't seem however to affect the growing exchange flows between the two countries and the increasing participation of road in the modal share of the exchange. In practice however, it can be mentioned that NAFTA is the only area in the hemisphere in which restrictions still exist to the participation of national companies in the bilateral trade of two countries members of a same of free trade agreement. This limitation is not presented however in the international transport with Canada due to agreements previous to the signature of NAFTA. According to documents and studies prepared in Mexico, the competition of the U.S. companies that operate in Mexico and the attractiveness of looking for Mexican cargoes in the American market, has encouraged Mexican companies to get into partnership associations with their counterparts in the U.S., invest in new equipment, and improve their operations management in order to respond to the demands of the US market.

2) Central America

In the Central American Common Market, the access to the profession and the international markets inside the region are absolutely open to all the operators independently of their nationality and of the traffic that they decides to handle. This means that a Salvadoran truck transport company for example, can carry out its operations between Guatemala and Costa Rica, passing through Nicaraguan territory, without any limitation as to cargo share or his nationality. This way the MCCA is the most internally open market of road transport services in the continent.

This wide operation freedom has not been however enough a factor for the efficiency in the operations of road transport. Poor infrastructure and the lack of resources equipment maintenance together with security and safety problems and long delays at the border controls, have kept the trucking industry below hemisphere averages. It is worth mentioning that the sea-land intermodality is well developed in Central America, with the particularity that it is controlled entirely by the shipping lines. The truck owners are hired by the shipping lines at the port to drag the semitrailers to internal freight stations. These are relatively numerous in the region, although generally owned by companies for private use.

3) Andean Community

The Andean regional system of road transport has regulations similar to those of the MCCA although somewhat more restrictive since transport operations internal to the country are restricted to national trucking companies. Beyond that limitation, the transport in the five Nations is open without restrictions to all the companies of Andean nationality, from any or from several member countries, as the Andean multinational companies. Contrary to the MCCA, however, only registered companies, legally authorized in their country of origin, can service international transport, within the limits of the itineraries previously declared. The registration procedure is important because it allows to control and to sanction the companies that do not comply with the rules set in the related decisions of the Andean Community (decisions 257 and later modifications).

The most important traffic in this area is found between Colombia and Venezuela and this is also where, in the border zone, are many freight terminals belonging to truck companies enjoying duty free status, that can be used as temporary import storage facilities.

4) Southern Cone

The Meeting of Ministers of Transport and Public Works of the Southern Cone that gathers Argentina, Bolivia, Brazil, Chile, Paraguay, Peru, Uruguay, has developed the most regulated system of the continent. Within the multilateral framework established by the international agreement for land transport signed in 1989, bilateral traffic flows may be ruled as required through bilateral agreements adopted by transport authorities in concerned countries. There are still cases in which bilateral transport is subject to the compliance of shares for each nationality. This agreement signed by the seven countries of the South Cone, and the successor of other three previous regional agreements, has been a model of effectiveness and flexibility. It has contributed to the harmonious development of the transport industry in the region. When Mercosur was created, the member countries adopted this agreement as part of the regulatory structure of the Mercosur and since then have made improvements for its internal application within Mercosur. One of the prominent achievements of the Agreement consists on having integrated the regional standardization of the driver's license, the insurance policy and the customs transit declaration, which resulted in a better border’s crossing. Although, for other reasons, delays are still high at borders in the Southern Cone.

The transport services in the Southern Cone have evolved considerably in the 90s and have taken advantage of the opportunity offered by the explosive growth of the trade in the area. This way, door to door services including consolidation, storage at destination centers, distribution and delivery at final sales points are not exceptional anymore. Computer systems more and more are used in companies operations management and the global logistics solutions are commonly offered in Brazil in Argentina and in Chile.

B)  REGIONAL RAILWAY SYSTEMS

The international transport by rail in the hemisphere is still very limited and the least important for the movement of external trade compared with its direct competitors, road and sea transport. Rail is currently in a renovation phase as a result of recent deregulation and privatization process, that have brought modern administration techniques, new haulage and traction equipment as well as the adoption of new marketing strategies and the supply of intermodal transport services.

The presence of the rail way is heavily concentrated in the two extremes of the continent: in NAFTA and in the Southern Cone of South America. The traditional advantages of the railroad, as economies of scale for the bulk traffic in medium and long distances, but also the new ones with marketing systems that respond to the logistics demands of the manufacturer industry appear in both cases but very differently. In the north, within the three member countries members of the NAFTA there is an integrated network, with a single gauge, interchangeable equipment and long term cooperation agreements among the different railway companies; whereas in the southern cone of South America, due to topographic obstacles and gauge differences, the railway system consists more of a set of railroad branch lines some of which have international connections but the cooperation agreements between the different companies in order to offer integrated services are still precarious.

1) Central America

In Central America projects of future developments exist, as those of the land bridge in Panama, and the rehabilitation of the railroad recently privatized in Guatemala and their possible international connections to El Salvador and the Mexican network, although in this last case faces the obstacle of a different gauge.

2) Andean Community

In the Andean Community the only international rail traffic in use is the one that links Peruvian network with Bolivia through a ferry transport connection over Lake Titicaca. The other connection with the Chilean network is not operated. The railroad in Bolivia is still a major mode of transport of international trade although largest flows go to Chile and Mercosur countries.

3) NAFTA:

Railroad competes favorably with road transport within the so called land bridges between the ports of Los Angeles-Long Beach and Mexico D.F., as well as in grain transport from mid-west and northern USA. Double stack container carriage, computer systems used for tracking and operation programming, railway companies cooperation agreements for use of the track and exchange of rolling equipment, are fairly consolidated procedures in this area. Delays to cross the Mexico-US border and limitations in capacity at port terminals of the North American Pacific coast and internal freight stations in Mexico, are known as current major difficulties for traffic growth in the future. Both aspects should be solved by means of improvements in the control procedures but also with high investments in infrastructure.

4) Mercosur

In the Mercosur, the participation of the railroad in the intra-regional international traffic is still very low compared to the road share, although intermodal services linking rail to sea and road transport are foreseen to grow sharply. Infrastructure and limited capacity of the equipment still hamper a possible greater participation of the railroad. The intense interchange of spare parts that will arise from investments in the car industry in Brazil and Argentina is expected to foster new investments for the improvement of these two obstacles.

C)   REGIONAL INSTITUTIONS OF IT INDEXES

• MCCA: the SIECA, the INCAE

• Andean community: The secretary of the Andean Community

• Mercosur: Subgrupo 5 of transport and infrastructure

• ALAF: Latin American Association of Railroads

• NAFTA: Surface Transport Standards Subcommittee

• Trilateral Transport Advisory Group

A)  GROWING IMPORTANCE OF THE AIR TRAFFIC IN THE HEMISPHERE

According to the 1997 annual report on civil Aviation of the ICAO, North America with 13.5% and Latin America and the Caribbean with 9.7%, for a total of 23.2%, the western hemisphere lies second to Europe (55.1%) in international traffic of passengers. On the other hand, the combined Latin America and the Caribbean reached the biggest world growth of traffic in the year 1997, both in international traffic (14.3%) and combined international and national departures (10.1%). These shows the importance and dynamics that characterize this mode of transport in the hemisphere.

B)  EXISTING REGIONAL SYSTEMS

The rational of bilateral management of international air transport, since its regulation through the Chicago Convention of 1944, would indicate that no regional systems of air transport can exist considering that multilateral agreements do not exist for air navigation commercial traffic. In fact, it is not strictly true as, within the continent, three air transport regional agreements can be found that without fully overcoming the limitations of bilateral systems, show samples of progress toward regionalism.

From North to South, the following agreements are to be mentioned: NAFTA’s member countries, the decisions of the Andean Community and the regional agreement in the Southern Cone of South America.

The first one called NAAT - North Trilateral American Aviation, is a mechanism to achieve a safer and more effective air transport through the harmonization of standards, systems and procedures as regards civil aviation and especially in the system CNS/ATM (Communication Navigation Surveillance/Air Traffic Management). The Trilateral of Aviation of North America has already met five times and gathers civil aviation authorities from Canada, United States and Mexico.

In the Andean Community of Nations, the decisions 297- Integration of the Air Transport in the Andean Subregión and the 320 Multiple Appointment in the Air Transport in the Andean Subregión with their later modifications, of June of 1994, 10 the Decisions 360 and 361, establish in practice the mutual grant of rights of third, fourth and fifth freedom to traffic of national or multinational companies of the Andean Community and the multiple appointment of these companies. This community rule makes this grouping the most internally open of those of the continent and is the only example of a truly regional system of traffic. The institution responsible for the consideration of the air transport is the Andean Committee of Aeronautical Authorities (CAAA). It is also worth mentioning the Andean Association of Airlines.

In the southern cone, the Subregional Agreement signed by Argentina, Bolivia, Brazil, Chile Paraguay and Uruguay, is aimed at the development of regional routes that would link pairs of cities not connected before the agreement, particularly those with little service. This mechanism allows for the opening of traffic and frequencies, to serve new markets of regular air services.

C)  TRENDS IN AIR TRANSPORT POLICIES

Open skies agreements, although of bilateral character, as subscribed by USA and Canada and as adopted as a policy by Chile, pave a possible way for regional opening of traffic in the continent.

A new initiative aiming at the adoption of a common policy for commercial air navigation has developed in the framework of the Ministerial Conference of Transport, Public Works and Communications of South America. This initiative was born soon after a seminar promoted by ALADI and carried out at ECLAC headquarters in April 1997, later on included in the agenda of the Conference of Ministers, is now conducted by a work group that should present a resolution project in the next meeting of this Conference foreseen to be held in Bolivia in November 1998.

One of the conclusions of the mentioned seminar that deserves to be quoted, says: "The regulatory framework effective in the Andean Group, the agreement subregional adopted by the countries of the Mercosur, Chile and Bolivia,"…. and "the institutional framework arisen at national level soon after the privatization process, on one hand, and on the other, the multiplication of management agreements for operation and commercialization, conform a favorable environment for a convergence and a greater regional homogeneity for the commercial air transport. This circumstance should constitute the basis to progress toward a greater coordination among authorities of the region in search of uniform operative framework, with homogeneous rules and regulation systems. It is recommended in this sense to keep progressing both in the expansion and in the possible linkage of the existent multilateral agreements. Also, it is recommended to ensure strict compliance of facilitation standards for air transport of passengers and cargo, adopted by ICAO and CLAC."

D)  REGIONAL INSTITUTIONS

• CLAC: Latin American Commission for Civil Aviation

• OACI: International Civil Aviation Organization with regional headquarters in Lima, Peru, and world headquarters in Montreal, Canada.

• Aital: International Association of Transport Air Latin American

• AALA: Andean Association of Airlines

This overview of the region’s transportation systems may serve to indicate some of the most important features of international commercial transport in the hemisphere:

• Sea transport remains the most important mode of exchange between regional groups with more than 50%of the volume and value of traded goods
• The most important mode for intra-subregional trade is road transport in general, apart from the Caribbean, both in terms of value and volume. Over some distances and for some products, like bulk cargo and container traffic, rail and inland waterway transport have promising potentials;
• The two preceding observations suggest that the development of trade between various regional groups will require the development of intermodal sea-land systems;
• The most intense trade in the region is, of course, that which takes place between its biggest economies, i.e. those that make up NAFTA and Mercosur, which lie geographically at the two extremes of the hemisphere;
• The foregoing observation might suggest that the intensity of traffic, the economies of scale and the sophistication of services offered in the great sea-land corridors of Nafta-Mercosur trade may well set the pattern of development for the hemisphere’s transport as a whole;
• Trade flows with the rest of the world are still more important, in quantitative terms, than those among countries of the hemisphere, with the notable exception of the NAFTA countries, and this circumstance will condition the development of the regional sea transport system;
• If this preliminary diagnosis is correct, the Western Hemisphere Transport Initiative, WHTI, should have as its primary focus the goal of creating internal and external linkages for the region.

The proposals set out below have been prepared on the basis of the foregoing observations and involve three major themes of work for the WHTI, within the framework of the implementation of the decisions included in the Plan of Action of the Summit of the Americas and could be considered at the next ministerial meeting.

If approved, their implementation should be achieved by means of the creation of work groups responsible for developing concrete proposals based on technical studies.

1) Institutional linkage and convergence:

As with the Conference of South American Ministers of Transport, Public Works and Communications, the WHTI ministerial body should recognize that its working capital lies in the progress achieved by existing regional forums that have contributed and will bring to the construction of a regulatory and operative framework that has promoted the development of the transport services and systems in the whole region.

Principles of institutional development:

Convergence and integration: an institution that knows how to receive from the existent regional forums the proposals and the regulatory, organizational and technical developments, to support the regional works and to collaborate to integrate them through hemispheric solutions;

Orientation of policies: the WHTI should be focused in the development of proposals that would become reference frameworks for the development of compatible regional solutions and directed to the linkage of the transport systems at hemispheric level;

All the agreements or resolutions up to now adopted in relative matters to the transport in the different forums sub regional would remain fully valid until they can be improved and substituted for solutions agreed at hemispheric level by the WHTI;

The subregional specialized forums would continue working in autonomous way, progressing with the agreements or resolutions in the matters that are of their incumbency. As consents take place in the WHTI, agreements will be reached that, at subregional level, will allow to look for a growing compatibility and homogeneity of solutions;

For its operation, the WHTI should have a coordination and follow-up mechanism, ideally entrusted to a regional cooperation organization in collaboration with the WHTI presidency.

2) STANDARDS LINKAGE AND CONVERGENCE

If the systems of integrated transport are those required by the development of the intracontinental trade, WHTI task should concentrate on the elimination of the obstacles to the development of the sea-land and sea-inland waterways intermodality. This task fully and legitimately belongs to the WHTI within the limits established as principle of its operation and linkage with the existing subregional transport institutions. To achieve the above, the following aspects seem of high-priority, most of which have been experienced or are part of on going initiatives in the hemisphere:

Facilitation of the transport: in particular solutions for customs, sanitary and phitosanitary control at the border crossings points and at transshipment terminals in general, including ports and rail, and internal freight stations;

Technical standards of teams of transport: these are crucial in order to make loading and unloading operation easier and, in general, to allow interconnectivity and interoperability among the various modes of transport. This definition should involve active participation of the private sectors of transport operators and users;

Land, sea and air safety standards: systems should be designed for applying and enforcing international standards in the various modes, in terms of both environmental protection and public safety, so that these controls do not interfere with the smooth operational flow of transport.

Development of hemispheric services: this should presumably be one of the major strategic considerations for WHTI, and will depend in large part on the success achieved under the headings of facilitation, standardization and safety regulations, but also on creating linkages with global transport systems. As hemispheric transportation grows, operators based outside the region will be attracted into offering increased competition to the services provided by western hemisphere operators. The time is likely to come when proper regulation and control over this competition will call for the establishment of rules of access to the hemisphere’s transport markets. Market access mechanisms will in any case have to adjust to agreements reached within the negociation group of the Summit of the Americas.

3) LINKING INFORMATION NETWORKS

There is currently a good deal of knowledge about transportation problems and challenges that is going to waste within the hemisphere. This is evident in at least two broad areas:

- The lack of reliable statistics on international transport movements, whereas in fact most customs administrations keep constant data records on shipping volumes and weight, terminals of origin and destination, etc;

- The lack of focus and poor dissemination of research on transport issues, and the resulting tendency to duplication.

Recognizing the quality of the output of public institutions, such as the Mexican Transport Institute (IMT), Geipot (Brazil), Transport Canada or the US DOT, not to mention the man studies produced by international agencies and universities throughout the hemisphere, the WHTI could take the initiative in both of these areas to promote a network for disseminating knowledge, and information on hemispheric transport.

With respect to regional transport statistics, mention should be made of the SETAS project (Transport Statistics System for South America), which is still in the development stage, and which is intended to establish a center of information on international flows within that continent, on the basis of existing national statistics systems. That scheme could be expanded to include all the members of the WHTI.

In terms of information networks, the access offered by the Internet to major study sources and discussion groups represents a considerable asset, but further efforts will be needed if research is to be made available in a timely and appropriate format for decision makers. Such a service could be provided by a WHTI sponsored monitoring and reference center that could have its own web page.

4)  FINAL CONSIDERATIONS:

Besides elements briefly presented in this profile, many other aspects can have a considerable impact on the integration of the regional transport systems in the hemisphere. At this still initial stage of the formation of the WHTI, and in the framework of this profile, it seems premature to consider them in detail but it is still necessary to mention some of these probable elements of change.

Observed trends in the concentration of the maritime transport services, specialization of the land transport and intermodal services could cause deep alterations in the organization of the services and a boom of hub and spoke points. In this context, maritime terminals and inland freight stations may become extremely relevant.

The continental physical and economic geography induces to think that the flows should remain essentially north-south bound, but the large investment projects for regional physical integration, together with new institutional infrastructure, like in the case of the transversal or interoceanic corridors in the Southern Cone, but also those at national level with influence in the regional traffic, as the alternative projects to the Panama Canal, may well impact on the directions and concentration of traffic flows.

Physical and operative linkage of the regional systems, required for the development of integrated systems inside the continent, need compatible infrastructure and equipment be made available to the operational continuity and fluidity of the transport services.

Finally and taking into account the above mentioned factors, the central role of the WTHI in the continent should consist in creating interfaces between different systems and not in aiming from the beginning at the unification and uniform systems, a task in which it could loose its strength before reaching its goal.

• The calls in parenthesis, point out to reference to comments or suggestions made by the country or the mentioned organism. The text presented with the reference doesn't necessarily correspond to writing proposed by the country or the organism but rather reflects the comment or suggestion of the mentioned source.
• Some changes in the presentation or in the writing have been introduced without mentioning the source those are modifications or necessary complements, like the table of contents, the source of the data, charts and maps, etc.
• The regional outlines of integration that were retained for the study are those constituted in multilateral agreements, discarding the alliances of bilateral character, those that in spite of being the most numerous in the continent, they present in some cases, characteristics, as the geographical distance that make them incompatible with an analysis of the physical integration of the transport systems that feed them. Likewise the transport systems are considered in the Profile from the perspective of their functionality and service to the related integration grouping; meaning services, equipment and infrastructures networks that contribute to the commercial exchange inside the geographical environment of the grouping, between the groups and their commercial partners inside of and outside of the continent. The groupings include to the following countries:

• Mercosur +: Argentina, Brazil, Paraguay, Uruguay and Chile like associate country

• Andean community: Bolivia, Colombia, Ecuador, Peru, Venezuela

• MCCA: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama

• NAFTA: Canada, Mexico, United States

• The Caribbean: Antigua and Bearded, Aruba, Bahamas, Barbados, Belize, Cuba, Dominique, Guadeloupe, Guyana, Haiti, Jamaica, Martinique, Panama, Republic Of the Dominican Republic, Suriname, Trinidad and Tobago

• ALADI: for the values and volumes of the exports of the Mercosur, the Andean Community, Chile and Mexico.

• Statistics Canada: for the exports of Canada: ("Exports, Merchandise trade", Cat. 65-202; Transport Canada, ACACB (In this table the countries considered in the denominated grouping The Caribbean plows: Barbados, Guyana, Jamaica, Trinidad and Tobago, Bahamas, Belize, Haiti, Republic Of the Dominican Republic, Suriname, Antigua and Bearded, Cuba, Dominique, Santa Lucía, San Vincent/Grenadines, St. Kitts-Nevis;

• Bureau of Census: for the exports of the United States and the imports informed by United States from The Caribbean (Antigua, Bahamas, Barbados, Dominique, Republic Of the Dominican Republic, Grenada, Haiti, Jamaica, Trinidad and Tobago)

• Statistical annual of the ECLAC 1997:  For the exports of the Caribbean: (exports informed by the countries from The Caribbean to Mexico) as well as the exports of the MCCA.

• The data of external trade for the countries of ALADI are those that the member countries of the Association surrender to that institution and have been validated by ALADI as to their value. ECLAC Transport Unit has processed the information of volume or weight, flag of the transport and means of transport, included in those same databases. These data have not been validated by ALADI.
• Comments have been received about the figures corresponding to certain flows that would present strong differences with those published by national statistical institutions. Whenever possible, the figures used in the first draft have been corrected with the information provided by the countries. However, it is necessary to highlight that, these are differences in grade and not in nature, they don't invalidate in principle the observations and proposals contained in this document.
• On the other hand, the information published on volumes and modes of transport of the international trade in the countries non members of the ALADI is still scarce. This reflects the lack of harmonization of the statistical transport systems information in the continent.
• To simplification effects in the presentation of the trade flows and of their transport, five regional groups of countries have been configured. Three of them, NAFTA, MCCA and CAN correspond to the formal configuration of the group. In the other two, called Mercosur + and The Caribbean, Chile appears as country associated to the Mercosur and adds its participation to the exchanges of Mercosur; The Caribbean includes the Caricom countries.
• Although as mentioned chapter on transport and trade in the hemisphere, there are eight major groupings, the consideration of these five groups makes the presentation simpler and doesn't change the analysis of the interchange neither of its repercussions on the transport systems.

© 2000 Executive Committee of the Western Hemisphere Transport Initiative, and, Office of Summit Follow-Up, Organization of American States.
This page is best viewed with a small font and Microsoft Explorer 4.0. (free download).
If you are using Netscape, use Netscape Communicator 4.5 or better (free download).