Express interest: The air cargo industry delivers its first lobby report for The Free Trade Area of the Americas. (Trade Lanes).

The clearest sign yet that negotiation for a Free Trade Area of the Americas by 2005 is under way in earnest? As talks begin to gain momentum, the air-express industry has published one of the first lobbying reports highlighting its positions and the pan-regional importance of such a pact.

DHL, Federal Express, TNT and United Parcel Service (UPS)--which together account for approximately 85% of the world's express shipments--along with local participants Aeromexpress and Estafeta in Mexico, LACSA Courier in Costa Rica, and LAN Courier in Chile, among others, comprise an express industry expected to generate total economic output of almost US$126 billion, according to a study by the PA Consulting Group. The express companies provide 1.2 million jobs representing employee compensation of $46.7 billion in the Americas by the end of 2003.

Beyond this sort of hyperbole, the key message of the study, commissioned by the Organization of American States, is that significant progress toward liberalized air trade has already been achieved. What remains to be accomplished are expanded trade deals between the largest countries--United States, Brazil and Mexico--and liberalization of express cargo trade between Latin American and Caribbean countries.

Air freight at Miami International Airport has been rising in recent months, thanks to rebounding Latin American cargo. International air cargo grew almost in September 2002 compared the same period a year ago, says the Miami-Dade County Aviation Department.

"The continued growth of international express services can contribute significantly to the ongoing economic recovery," says Ana Guevara, FTAA committee chairman for the trade association Conferencia Latinoamericana de Companias Express. "But for this to happen, the industry, its customers and government leaders in the Americas must all work together."

Big stubborn countries. Thanks in no small measure to American Airlines' alliances with major carriers in Chile and Central America, the United States and 11 countries in the region have already agreed to fully liberalized air cargo service. These deals are with Argentina, Chile, the Dominican Republic, Jamaica, Peru and all of Central America except Belize. U.S. bilateral accords with Colombia and Uruguay also put few restrictions on the business.

The bigger the country, the more stubborn on air cargo seems to be the rule. Mexico and the United States restrict each other's service even though they have already signed a free trade agreement. Brazil and the United States continue to butt heads over the number of designated carriers, frequency of service and a multitude of other issues. The Andean region has the most liberal agreement.

Where perhaps the most work will have to be done to complete the Free Trade Area of the Americas, however, will be hammering out air cargo trade deals among Latin American and Caribbean countries. The terms between countries in the region are much more restrictive than each country's bilateral accord with the United States. The lack of standards from one country to the next add still more complications.

All of the countries have agreed to work on eight customs areas to make doing business easier for air cargo. More than three quarters of the measures have been at least partially adopted, but a quick review shows that customs operating times still range from 24 hours a day, seven days a week to as little as eight hours a day, five days a week.

Private concerns have sought to improve customs operations to reduce delays. Union Pak, a service provider for UPS, has worked with Costa Rican customs to set up a grade system for clearance using colors, from immediate (green), to documentation review (yellow) and full physical inspection (red), reducing clearance time to three hours from three days.

DHL and the American Chamber of Commerce in Sao Paulo conducted a survey of 200 Brazilian firms in international trade to identify improvements in Brazil's import and export process. The survey identified some 96 bottlenecks that extend the time from ordering of raw materials to final delivery to as much as 124 days. The results suggested ways of cutting that time in half, saving $1 billion in operational costs, according to DHL.

Apart from opening air cargo markets and streamlining customs, express air cargo carriers are pushing for rules allowing a role in ground transportation and rules requiring government-backed airlines and postal systems to operate under the same conditions as private operators.

CUSTOMS OPERATIONS

As June 2001

Country                  Express Weight            Express $
                                  Limit               Limits

Argentina                      50 kilos               $3,000
Bolivia                        40 kilos               $1,000

Brazil                               No  $3,000 for imports;
                                          $5,000 for exports
Chile                                No                 $500
Colombia                       20 kilos                1,000
Costa Rica                           No      $1,000 per item

Dominican Republic  70 lbs.w/out decree     with decree $500

Ecuador                              No               $4,000

El Salvador                          No                   No
Guatemala                            No                   No

Honduras                             NO                   NO
Mexico                               NO                   NO
Nicaragua                            NO                   NO
Panama                               NO                   NO
Paraguay                             NO                   NO
Peru                           50 kilos               $2,000
Trinidad & Tobago     70 kilos per item               $1,000
Uruguay                              NO  $3,000 for imports;
                                          $1,000 for exports
Venezuela                            NO                   NO

Country             Simplified clearance      De Minimis *
                           process limit

Argentina                            Yes                No
Bolivia                    $1,000 and/or                No
                                40 kilos
Brazil               $3,000 for imports;                No
                      $5,000 for exports
Chile                               $500               $30
Colombia                          $1,000                No
Costa Rica               $1,000 per item          $200 for
                                            personal items
Dominican Republic    w/o decree $42,000              $500
                           w/decree $500
Ecuador                              Yes  $200 and 2 kilos
                                              pay only VAT
El Salvador                          Yes               Yes
Guatemala                  $50 to $1,000               $50

Honduras            $300 and/or 10 kilos                NO
Mexico                            $1,000                NO
Nicaragua                             NO               $50
Panama                                NO               Yes
Paraguay                              NO              $100
Peru                                $100              $100
Trinidad & Tobago                    Yes                NO
Uruguay              $50 and/or 20 kilos               $50

Venezuela                         $2,000            $2,000

Country              % of shipments
                          inspected

Argentina                       10%
Bolivia                         60%

Brazil                          10%

Chile                           20%
Colombia                   Variable
Costa Rica                      25%

Dominican Republic             100%

Ecuador                 Quito: 100%
                     Guayaquil: 40%
El Salvador                     15%
Guatemala           85% simplified;
                         40% formal
Honduras                       100%
Mexico                          10%
Nicaragua                      100%
Panama                      70-100%
Paraguay                       100%
Peru                           100%
Trinidad & Tobago              100%
Uruguay                        100%

Venezuela                      3-20

Source: CLADEC

* value under which shipments are exempt from customs duties and
eligible for fast-track entry