DRC closes Mexican office
DRC closes Mexican office
The Dispute Resolution Corp.'s Mexican affiliate closed its doors Friday, Aug. 31, largely because of a lack of participation by the Mexican buyer community.
DRC President Stephen Whitney and Chairman of the Board Matt McInerney of Western Growers Association told The Produce News that after a five-year membership drive, there simply were not enough members in Mexico to sustain an office. The 40 members that are in good standing will continue to be served by the DRC office in Ottawa, ON, as is the case with their U.S. and Canadian counterparts. They can avail themselves of all DRC services in Spanish.
The DRC was established almost a decade ago to serve as a dispute resolution system for trade among produce operations in the United States, Canada and Mexico. It was designed to serve the same function as the U.S Department of Agriculture's PACA branch.
While the PACA offers dispute resolution when product is shipped within or into the United States, there was no similar governing body in Mexico, and Canada had struggled with its own dispute resolution system for decades. The voluntary DRC was designed not only to handle international disputes but also to serve that function for transactions between two Canadian companies. DRC Mexico was established as a separate entity to promote membership and establish a similar function for solving disputes between two Mexican companies.
Mr. Whitney explained that a separate entity was necessary because the Mexican government did offer seed money, which had to go to a Mexican organization under Mexican law. That seed money did allow for an initial surge in membership as some of the money was used to subsidize membership for Mexican companies. However, members now must pay their own fees and almost all those who have remained are exporters shipping to the United States and Canada. Their motivation is basically the same as U.S. shipper members, which is to have a dispute forum when dealing with Canadian receivers.
Mr. Whitney said that until there is an infrastructure in place in Mexico that allows for destination inspection, the market for DRC membership will continue to be Mexican firms that can benefit from DRC services, namely those grower-shipper firms that export to Canada and the United States. The DRC will concentrate its recruiting efforts in Mexico on the exporting community, which is the only group for whom the DRC can currently provide any value in terms of services, he said.
Mr. McInerney said that destination inspection is the key to dispute resolution because it is the condition of a product upon arrival that leads to almost all disputes. There has to be a mutually acceptable, independent, third party inspecting that product and issuing an inspection report. Currently there are some private inspectors in Mexico but no universally accepted system.
Mr. Whitney said that the government agencies that would be involved have discussed the situation, but it has not progressed beyond that stage and it doesn't appear that it will in the near future.
Currently, DRC's membership is comprised of 824 companies from Canada, 320 from the United States, 40 members from Mexico, 12 from Chile and 10 from other countries. The DRC is a private, non-profit organization that was established under Article 707 of the North American Free Trade Agreement with the support and endorsement of the Canadian, U.S. and Mexican governments.
Mr. Whitney said that the more than 800 Canadian members represent about 90 percent of that industry, as the DRC has become the primary source for dispute resolution within Canada. He said that there is great potential for growth in both the United States and Mexico.
Mr. McInerney said that in some respects, the DRC is a victim of its own success. It is largely credited with greatly improving the business climate in Canada to the point that many U.S. and Mexican shippers apparently believe that membership is unnecessary.
Membership in the DRC is an insurance policy, Mr. Whitney said. "Some people choose not to be insured."
He added that new members often join after having a dispute with a member company and not being able to utilize DRC services because they themselves are not members.
DRC President Stephen Whitney and Chairman of the Board Matt McInerney of Western Growers Association told The Produce News that after a five-year membership drive, there simply were not enough members in Mexico to sustain an office. The 40 members that are in good standing will continue to be served by the DRC office in Ottawa, ON, as is the case with their U.S. and Canadian counterparts. They can avail themselves of all DRC services in Spanish.
The DRC was established almost a decade ago to serve as a dispute resolution system for trade among produce operations in the United States, Canada and Mexico. It was designed to serve the same function as the U.S Department of Agriculture's PACA branch.
While the PACA offers dispute resolution when product is shipped within or into the United States, there was no similar governing body in Mexico, and Canada had struggled with its own dispute resolution system for decades. The voluntary DRC was designed not only to handle international disputes but also to serve that function for transactions between two Canadian companies. DRC Mexico was established as a separate entity to promote membership and establish a similar function for solving disputes between two Mexican companies.
Mr. Whitney explained that a separate entity was necessary because the Mexican government did offer seed money, which had to go to a Mexican organization under Mexican law. That seed money did allow for an initial surge in membership as some of the money was used to subsidize membership for Mexican companies. However, members now must pay their own fees and almost all those who have remained are exporters shipping to the United States and Canada. Their motivation is basically the same as U.S. shipper members, which is to have a dispute forum when dealing with Canadian receivers.
Mr. Whitney said that until there is an infrastructure in place in Mexico that allows for destination inspection, the market for DRC membership will continue to be Mexican firms that can benefit from DRC services, namely those grower-shipper firms that export to Canada and the United States. The DRC will concentrate its recruiting efforts in Mexico on the exporting community, which is the only group for whom the DRC can currently provide any value in terms of services, he said.
Mr. McInerney said that destination inspection is the key to dispute resolution because it is the condition of a product upon arrival that leads to almost all disputes. There has to be a mutually acceptable, independent, third party inspecting that product and issuing an inspection report. Currently there are some private inspectors in Mexico but no universally accepted system.
Mr. Whitney said that the government agencies that would be involved have discussed the situation, but it has not progressed beyond that stage and it doesn't appear that it will in the near future.
Currently, DRC's membership is comprised of 824 companies from Canada, 320 from the United States, 40 members from Mexico, 12 from Chile and 10 from other countries. The DRC is a private, non-profit organization that was established under Article 707 of the North American Free Trade Agreement with the support and endorsement of the Canadian, U.S. and Mexican governments.
Mr. Whitney said that the more than 800 Canadian members represent about 90 percent of that industry, as the DRC has become the primary source for dispute resolution within Canada. He said that there is great potential for growth in both the United States and Mexico.
Mr. McInerney said that in some respects, the DRC is a victim of its own success. It is largely credited with greatly improving the business climate in Canada to the point that many U.S. and Mexican shippers apparently believe that membership is unnecessary.
Membership in the DRC is an insurance policy, Mr. Whitney said. "Some people choose not to be insured."
He added that new members often join after having a dispute with a member company and not being able to utilize DRC services because they themselves are not members.
