Failure to avert crisis will hurt Canada
WASHINGTON — America’s failure to avoid its latest budgetary crisis — the so-called sequester — could cripple Canadian exports, hampering the growth of Canada’s economy as well as causing long waits for travellers.
The failure of the U.S. Congress to approve lastminute measures to avert a crisis means the $1.2 trillion US in across-the-board cuts came into effect Friday night. The cuts will play out through to 2021. This year the government has to slash $85 billion US.
As many as 750,000 government and private-sector workers could be furloughed as a result of the sequester, which automatically cuts U.S. government spending by 2.5 per cent, with some departments hit with reductions of up to 8.2 per cent.
Most of the cuts target the military and the Department of Homeland Security, which oversees border traffic.
Homeland Security cuts will be particularly harmful for Canadians because they will affect Canada’s $2-billion-a-day trade and travel with the United States.
These cuts include ending overtime and laying off air traffic controllers, border guards, customs officers and food and agriculture inspectors.
Canadian Ambassador Gary Doer said he expects Homeland Security will immediately cancel overtime for customs officials at airports and land crossings.
“It might have an impact starting as early as tomorrow morning,” Doer said. He added that the situation would likely worsen during the spring break when airlines put on extra flights from Canada to the U.S.
He said there will be about a 10 per cent reduction in shifts, but that won’t begin to hurt until April when the furloughs will start, because workers have to be given advance notice.
Meanwhile, congressmen and women will be meeting beginning next week to examine the annual budget’s continuing resolution (CR), which essentially funds the budget.
This CR will spark another round of crisis debate because it is slated to expire March 27. The partisan battle could be even worse than the sequester issue.
Doer said he was hoping that lawmakers would moderate some of the cuts to border officials as they debate the CR.
He saw flickers of hope. “There are (congressmen) who believe that the $1.2 trillion should be cut but don’t believe in where it is being cut,” Doer said. “I think that will be part of the discussion.”
Doer suggested that Canadian travellers should apply for the Nexus program that allows travellers to avoid lineups at customs.
The Canada Border Services Agency announced Friday that it was adding a third Nexus lane at the Peace Bridge crossing in Fort Erie, Ont.
Canadian manufacturers and exporters have been in daily contact with the U.S. border agencies as well as the U.S. Food and Drug Administration and the U.S. Department of Agriculture, said Birgit Matthiesen, Washington special adviser to the Canadian Manufacturers and Exporters Association.
She said furloughs at U.S. Customs and Border Protection will begin April 7 along with overtime slashing and a reduction in travel.
On the good side, she said, the USFDA and the FDA are not contemplating layoffs.
“The other sector that I am extremely worried about are the just-in-time deliveries sectors, which is huge in Canada and the United States because we have such an integrated supply chain — automobile, agro-food, electronics,” she said. “The larger ports of entry are of concern. Any glitch can have a snowball effect.”
She said the ramifications from the sequester cuts might snowball as the year progresses. She noted that the 2013 spending in the U.S. is really at 2012 levels because the government has not approved a new budget.
“What they are going to be doing is extending 2013 federal agency budgets at 2012 levels minus sequestration levels,” she said. “So we are actually going back in terms of resources at the CanadaU.S. border and all other agencies.”