Cover

TROUBLE AT THE BORDER

Forget about faster crossings. New U.S. proposals threaten to strangle trade.

MARY JANIGAN March 31 2003
Cover

TROUBLE AT THE BORDER

Forget about faster crossings. New U.S. proposals threaten to strangle trade.

MARY JANIGAN March 31 2003

TROUBLE AT THE BORDER

Forget about faster crossings. New U.S. proposals threaten to strangle trade.

Cover

MARY JANIGAN

HE FLINCHES WHENEVER he opens his newspaper or glances at his e-mail. He knows he is probably going to find reports of another calamitous U.S. measure, adopted for the sake of security—with scant thought about how it will affect the economy. And lately David Bradley, the beleaguered CEO of the 4,500-member Canadian Trucking Alliance, has hardly had a moment to relax. As the U.S. moved to a war footing last week, three-hour line-ups at the border became commonplace. Although Canadian officials are working far more closely with their U.S. counterparts than in the wake of the Sept. 11 terrorist attacks, trucks are still facing intermittant and extended delays. And that is only one of many worrisome U.S. measures over the past few months.

This winter, the U.S. government proposed, and then only partially withdrew, demands for detailed prenotification of all shipments across the border: it wanted the list of contents on trucks from Canada four hours before they were loaded—and 24 hours ahead for U.S.-loaded trucks bound for Canada. How could this work when the auto sector is so precisely run that trucks are part of a moving assembly line, timed to arrive within 10-minute windows? Then the U.S. proposed that aliens should no longer transport explosives across the border. That would gouge a huge chunk out of the $300 million Canadian industry that supplies explosives for everything from avalanche protection to defence installations. There are proposals for mandatory transportation-worker identity cards—which make absolutely no provision for foreign truckers. Last week, the U.S. declared that Canadian landed immigrants from most Commonwealth nations will need a valid passport and visa to enter. And, coming soon, there will be a huge bordercontrol system collecting data on every person entering and leaving the U.S.

Bradley is at his wit’s end, scurrying to Ottawa and Washington, patiendy explaining how this could ensnarl more than 14 million annual truck crossings. “The Americans

cannot inspect every single shipment across the border,” says Bradley. “They must move more to risk-management models. They have to embrace technology.”

Forget those big ideas for the CanadaU.S. relationship like a customs union—at least for the near term. We will be lucky to preserve such formerly little ideas as hasslefree border crossings over the next few years. As the Americans have become ever more worried about security, the open border that sustains $1.9 billion daily in two-way trade is in danger of bogging down. This is all the more upsetting because traffic was moving relatively smoothly. In December 2001, soon after the 9/11 attacks, Canada and the U.S. signed a 30-point Smart Border Accord that included easy passage for lowrisk people and carriers. Pre-approved travellers could use their NEXUS photo ID card in dedicated lanes. Pre-screened truck drivers with shipments from pre-approved companies could slip into FAST lanes.

Now U.S. security concerns have thwarted that progress with an indiscriminate net. Since last month, for instance, marine exporters have had to file detailed manifests 24 hours before they even load their cargo. Now there is evidence of backup at the ports. “We are worried that the system could bog down entirely,” says Perrin Beatty, president of Canadian Manufacturers & Exporters. “It is quite clear right now within the U.S. that their agenda is overloaded. So our focus has to be very practical: the single highest priority is to ensure our borders remain secure and open.”

The bad news is that export-dependent Canadians had envisioned so much more.

‘We are worried that the system could bog down entirely,’ says Perrin Beatty of Canadian Manufacturers & Exporters

Last December, the Commons international trade committee produced 39 solid recommendations, including the call for a thorough review of long-term border options. It also wanted to resolve a range of irritants in largely resource-based sectors such as softwood lumber. The Senate foreign affairs committee is examining everything from a customs union to how to stop the application of U.S. trade remedy laws. The Canadian Council of Chief Executives has called for the creation of a Canada-U.S. joint commission on border management. International Trade Minister Pierre Pettigrew wants to expand mutual recognition of each other’s regulations. Novel ideas are legion. “But, right now, what is of interest to the Americans is security,” says C.D. Howe Institute policy analyst Danielle Goldfarb. “There have to be ways to make trade more secure and to facilitate it at the same time. The big worry is that these security-related changes will affect people’s decisions in terms of where they put their plant.”

The good news is that Ottawa is struggling to ease the problem. Pettigrew has urged U.S. politicians to move the border away from the border, expanding the FAST and NEXUS models. He points out that Canada buys 19 per cent of U.S. exports: it is the largest market for 38 states. And it supplies 17 per cent of U.S. imports of crude and refined oil products and 94 per cent of natural gas imports. “Very often we talk about our dependence on the U.S.,” Pettigrew told Maclean’s. “We do not realize the U.S. is dependent on us as well. We, too, are preoccupied with security. I just want to make sure this does not affect trade.”

So how are we doing? We don’t have much leverage. The U.S. has no incentive to streamline the border because of its vital energy imports: those cross in pipelines. It has withdrawn its proposed timetable for truck preclearance—but some form of prenotification for rail, air and truck cargo is inevitable this year. It is still mulling Canada’s request for an exemption from the entry-exit requirements. In the short term, the border can only get worse. In the longer term, there may be room to expand FAST and NEXUS. “Canada’s greatest economic asset,” says Bradley, “has been its enviable and free access to the U.S. market.” It is an access we can no longer take for granted.

Mary Janigan’s column appears every other issue, mjanigan@macleans.ca