Doing Business Across the Canada-United States Border: Gateway or Checkpoint?

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Doing Business Across the Canada-United States
BorderGateway or Checkpoint?

• David Bradley
• CEO, Canadian Trucking Alliance
• President, Ontario Trucking Association
• April 18, 2008
• Cleveland, OH

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• Federation of provincial trucking associations
• 4,500 member companies
• 150,000 employees

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• Canada-US Trade
• Still worlds largest bilateral trade
  relationship
• Bilateral trade tripled since 1989
• 1 1/2 billion crosses border daily
• Relationship characterized by rules-based
  trading, dispute resolution
• Relationship based on integrated production
• US-Mexico trade based on lower labour costs
  US-Canada trade based on quality, capacity
  utilization
• 40 of Canada-US trade is intra-firm
• Every NA vehicle contains US1,250 Canadian parts
• Canadas Economic Reality
• Exports to US 25 of Canadas GDP
• US accounts for gt70 of Canadas exports
• gt one-half of Canadian agric. exports to US
• Canadas trade/GDP ratio 80 US 25
• Every billion in trade 10,000 jobs

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Canada-US Trade is a Two-Way Street

• Canada is
• Top US export market gt 60 yrs
• Destination for 1/4 of US exports
• Top export market for 39 states top 3 for 8
  others
• USs 1 supplier of energy (oil, natural gas,
  nuclear electricity)
• US sells Canada
• More than 25 countries of EU (even though
  population 15X that of Canada)
• 5X more than Japan
• gt½ of auto exports
• More agricultural exports than anywhere else (10
  billion, 400 pcpa)

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The Vital ConnectionReclaiming Great Lakes
Economic Leadership in the B-National US-Canadian
RegionBrookings Institution, March 2008

• Combined population of bi-national region _at_36 of
  population of both countries.
• If its stood alone as a country, would be the 2nd
  biggest economic unit on earth, after US economy.
  Larger than Japan, Germany, UK China, India.
• Region accounts for gt62 of Canada-US two-way
  trade
• Region accounts for _at_40 of Canada-US trade with
  the world.
• Great Lakes states exports to Canada 37 of
  exports to world
• Region occupies the frontlines in global
  restructuring

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Role of Trucking in Canada-US Trade

• Trucks haul 62 of Canada-US trade by value
• 80 of US exports to Canada
• Truck crosses border every 2 ½ seconds
• _at_20,000 enter US from Canada every day
• Trucking an essential component of the North
  American supply chain

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Trade, Trucks the North American Supply Chain

• Access means infrastructure, regulatory
  harmonization AND efficient borders
• Anything that impacts negatively on access to
  either country impairs the efficiency,
  reliability, predictability and security of the
  North American supply chain
• In turn, this negatively impacts overall
  competitiveness of and direct investment in North
  America
• Where we want to be
• Border needs to be MORE efficient and MORE secure
  than it was on September 10, 2001
• Are we there?

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Thickening Border

• Smart border accord 2001 greater security
  enhanced trade risk management
• Security trumps trade
• Efficiency benefits of programs like FAST, ACE
  have not been fully realized
• Layer upon layer
• Never-ending spate of US measures
• More inspections, technology glitches
• Cash grabs APHIS fees TWIC cards
• Canada Reinventing the wheel?
• Searching TL of auto parts for fresh-cut flowers
• Guilty until proven innocent
• Carriers/drivers exiting market
• Reduced truck traffic, but summer 2007 longest
  delays since 2001 (port-a-potties at Sarnia)
• Infrastructure Windsor/Detroit

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• Various cost estimates of impact of thickening of
  border
• Costing Canadian trucking industry 500
  million/year
• 13.5 billion drain on US Canadian economies
  from border delays (OCC) with US economy
  absorbing 40 of cost

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The Vital ConnectionReclaiming Great Lakes
Economic Leadership in the B-National US-Canadian
RegionBrookings Institution, March 2008

• Measures to tighten border security have
  complicated and slowed the flows across what was
  once the worlds most open border.
• Benefits of economic synergies are imperiled,
  however, by measures that add to the cost or time
  to cross borders between the United States
  Canada, and negatively impact enterprise,
  investment, and job growth across the region.
• Largest challenge to further economic integration
  is posed by homeland security concerns and
  measures that have slowed border and bi-national
  economic exchange
• This threatens to crimp trade and commerce, at a
  time when the region and both nations have
  tremendous shared stake in enhanced economic
  integration.

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What Needs to Be Done

• Threats Protectionism, complacency, layering,
  silo effect
• More participation by business in FAST
• Risk assessment vs check everything, everyone,
  all the time
• Bilateral, harmonized, mutual recognition
• End duplication of screening, fees, applications
  and inspections
• Cost-benefit
• Promises need to be kept reverse inspection
  pilot
• Infrastructure staffing
• Security Prosperity Partnership -- Results
  underwhelming
• US Canadian business communities at large need
  to be engaged
• Not just the truckers problem