The Border, Canada-US Trade and the Post-9/11 Security Regime with implications for Immigration and Diversity

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The Border, Canada-US Trade and the Post-9/11
Security Regimewith implications for Immigration
and Diversity

• Bill Anderson
• bander_at_uwindsor.ca
• Ontario Research Chair in Cross-Border
  Transportation Policy
• University of Windsor
• Prepared for Citizenship and Immigration Canada
• January 14, 2009

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Canada-US Border

• largest bilateral trade relationship in the world
  (1.5B per day)
• Mostly through Great Lakes crossings
• Cross-border supply chains
• 150,000 cars per day
• Increasing global trade through Canada to US
• Many miles of unfenced, unposted wilderness

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Canadian Exports to US 2007

• Fuels(25)
• Cars, trucks and parts (19)
• Electricity generation equipment (7)
• Plastics (3.4)
• Electrical Machinery (3.4)
• All other categories 3 or less

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US Exports to Canada 2007

• Cars, trucks and parts (22)
• Electricity generating equipment (16)
• Electrical machinery (7)
• Plastics (5)
• Fuels (3.5)
• All other categories 3 or less

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Ontario Economy

• Largest manufacturing work force in North America
  except California
• 1994-2003, manufacturing employment 33
• Exports are 59 of GDP, mostly manufactured goods
• More than ½ of Canadian Exports
• Automotives account for 38 of exports
• 80-90 of cars manufactured in Ontario sold in
  US.

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Merchandise Trade Crossing

• Oil, iron ore and other resource products cross
  by pipeline, water and rail
• largest rail crossing by value at Sarnia (by
  weight at Fort Frances)
• Most manufactured goods cross by truck,
• almost half on two bridges at Windsor/Detroit and
  Fort Erie/Buffalo
• Rapid movement of goods to support just-in-time
  production systems, especially in automotive
  industry

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Mode Share of Canada US Trade
Mode Exports Imports
Road (truck) 49 75
Rail 20 12
Marine 6 2
Air 5 8
Other (pipeline) 20 3
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Ontario Border Crossings
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Ambassador Bridge busiest freight border
crossing

• More than 25 of all US-Canada trade, 35 or road
  trade
• 10,000 commercial vehicles on a typical day
• Privately owned, 80 years old, 4 lanes
• 6 lane replacement planned
• Additional crossing planned down river

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Other SW Ontario Crossings

• Bluewater Bridge (Sarnia Port Huron, 12.5 of
  road trade)
• Detroit Windsor tunnel (1 passenger crossing)
• CN rail tunnel Sarnia Port Huron, CPR rail
  tunnel Windsor Detroit
• Windsor Detroit truck ferry for hazardous
  materials

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Peace Bridge

• Number 2 bridge, handles most of the freight
  through the Port of Buffalo
• Also 80 years old, owned and managed by an
  international commission
• Ongoing expansion plans complicated by local and
  environmental concerns
• 2003-8 truck traffic steady but cars down 11

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Other Niagara Frontier Crossings

• Queenston Lewiston Bridge (4 road crossing,
  freight in transit)
• Rainbow Bridge
• Whirlpool Bridge
• International Railway Bridge (used by CN and CPR)

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Impacts of September 11, 2001 on US-Canada Border

• Near closure of Ambassador bridge, hundreds of
  factories shut down
• Heightened security leading to long delays at
  borders for both freight and passengers
• Western Hemisphere Travel Initiative passport or
  comparable document required between Canada and
  US
• Land border implementation June 2009
• fewer than 30 of Americans and 50 of Canadians
  had passports in 2007
• Summer 2007, delays comparable to 2002

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Cross-border supply chains

• Value added in both Canada and US
• Automotive industry
• 1965 Automotive Products Trade Agreement
• Components may cross border more than once
• Agriculture (Livestock)
• Pork piglets raised in Canada, shipped to US for
  fattening and slaughter
• Other cross-border supply chains machinery,
  mineral energy, forest products, seafood

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Frequency of supply and distance (2002 CAR study)
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Impacts of border on auto industry

• 1 hour shutdown of assembly plant costs about
  60,000 this could be the cost of a delay in
  components delivery
• US assembled car contains about 1000 Canadian
  content, Canada assembled car contains 7500 US
  content (2002 CAR study)
• Canadian automotive plants more vulnerable to
  cross-border delivery risk

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Current Threats to Ontarios Automotive Industry

• Credit crisis, low demand
• Slow border crossings
• High dollar
• Changes in relative labour costs
• End of Auto Pact protections
• Shift of US production away from border
• Potential massive subsidization for retooling US
  plants

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Economic Impacts of Border Delays

• Labor and capital cost of idling trucks
• Risk of factory shutdowns due to failure to
  deliver components on time
• Inventory stockpiling to insure against delays
• Reduced tourism
• 7.1M jobs in US and 3M jobs in Canada depend on
  cross-border trade (US and Canada C of C)
• Estimated annual delay cost at over 10B (Ontario
  C of C).

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Addressing the border problem

• Expand and improve border operations
• New and expanded crossing infrastructure
• More booths, more personnel
• Improved technologies
• Better Canada-US coordination
• Move functions away from the border
• Risk-based assessment
• E-manifest
• reverse inspection

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Addressing the border problem (cont.)

• Alternative modes
• Road/rail intermodal
• Short-sea shipping
• The perimeter approach

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Perimeter approach to North American Security

• Proposed by US Ambassador Gordon Giffen in 2000
• Precedent in US/Canada export control perimeter
• Shift security from US-Canada border to US-Canada
  perimeter
• Requires adoption of common security standards
  and integration of law enforcement efforts
• In the extreme case could lead to open border
  comparable to EU.

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Perimeter approach practical problems

• Harmonization in some areas may be difficult or
  controversial
• firearms
• refugee and other immigration policies
• NAFTA is not a customs union and does not allow
  free movement of labor

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Perimeter approach political obstacles

• From the US side
• Public reluctant to trust officials of a foreign
  government to maintain security
• From the Canadian side
• Public sees this as a reduction in Canadian
  sovereignty (autonomy), because American
  standards are likely to prevail

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Risk-based assessment

• Pre-qualifying some individuals or firms as
  low-risk making the haystack smaller
• Comparable to basing insurance rates on
  demographic characteristics
• Exempting low-risk travelers or shippers from
  some security procedures
• Requires low-risk certification by both countries

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Trusted traveler program NEXUS

• US or Canadians register for program (50)
• Requires background info and interview with
  border officials of other country
• Biometric identification
• Special lanes on bridges and other crossings and
  at airports
• Chambers of Commerce goal to enroll one million
  people in NEXUS by late 2009

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Trusted shipper programs(Supply Chain Security)

• Expedited clearance for companies whose supply
  chain facilities and procedures are inspected and
  certified by border agencies
• Cooperation from importers, carriers, brokers,
  warehouse operators, manufacturers etc.
• On-site inspections
• Background screening of individuals

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Trusted Shipper (cont.)

• PIP (Partners in Protection, Canada) and C-TPAT
  (Customs-Trade Partnership Against Terrorism, US)
• FAST bilateral program, pre-qualifies drivers,
  carriers and importers as low risk
• FAST lanes at about 20 crossings
• TWIC (Transport Workers Identity Credentials),
  needed for access to US port facilities

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Practical problems with trusted shipper programs

• Separate lanes are not long enough to avoid
  backups
• Program participants still subject to secondary
  search
• Cost of compliance for membership up to 100,000
• Many firms decide its not worth it
• Complaints that they discriminate against smaller
  firms

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Potential issues for immigration and diversity

• In the border regions, a FAST card is a
  precondition for employment as a truck driver
• Applications must be approved by both US and
  Canada
• Some criticism based on lack of transparency
  (Truck News, Feb 2007)
• Anecdotal evidence that immigrant groups may be
  disadvantaged or be reluctant to apply

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Grounds for denial of FAST Card application

• Provide false information on application
• Convicted for a criminal offense in any country
• Violate of customs or immigration program
• Fail to meet other requirements of the FAST
  Commercial Driver Program

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Issues of special relevance to immigrants

• Information required on
• Rehabilitation under Canadian Immigration laws
• Waivers of inadmissibility issued under US
  immigration laws
• any personal information you provide will be
  shared with other government and law enforcement
  agencies

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Issues to be addressed

• Are certain groups more likely to have their
  applications rejected? (no statistical evidence
  that I know of)
• Do rejected applicants pursue review option and
  discover reason for rejection?
• Are certain groups reluctant to apply in the
  first place or reluctant to reapply if they are
  rejected?
• What help can be provided to immigrant drivers
  and business people seeking certification?
• Effect on Temporary Foreign Worker Program

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Broader political challenges

• Some US interests may benefit from border
  problems
• Anti free trade forces in Canada may favor
  border delays
• US-Canada border issues often linked with
  US-Mexico border issues

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3 Asymmetries

• Proportional weight US-Canada trade makes up a
  larger share of Canadas economy.
• Vulnerability abandonment of cross-border supply
  chains biased against smaller economy.
• Political influence US preferences likely to
  prevail in joint decision making.