Bumps on the road
The U.S. is Canada’s biggest trade partner and vice versa, but this doesn’t mean the relationship is seen as equally important by people on opposite sides of the border.
The ratio is slowly changing, thanks in part to the postrecession sluggishness in the U.S. economy that’s forcing Canadians to look further afield. But for industries in most parts of this country, the U.S. market has traditionally accounted for all but a tiny fraction of export sales.
Even in B.C., the least U.S.dependent province thanks to its proximity and strengthening ties to Asia, it sells more to the Americans than to its next five top trading partners combined.
Meanwhile, Canadians buy not quite 20 per cent of what U.S. companies export.
What this imbalance means, says Chris Sands, a senior fellow at the Hudson Institute and a professor of U.S.Canada relations at Western Washington University, is that Canadians regard border integration as a top priority, while Americans see it merely as one of many things on their to-do list.
The result, Sands told a Board of Trade conference recently, is that the Beyond the Border initiative endorsed last year by Prime Minister Stephen Harper and President Barack Obama is making progress almost in spite of inattentiveness on the U.S. side, and an ingrained tendency to “think globally and act locally” when it comes to taking action on trade.
Both Sands and other speakers made it clear, however, just how far there is yet to go to streamline border-crossing issues.
The goal is a policy of “inspecting once and clearing twice” to avoid the cost — both in lost time and in duplicate staffing — of redundant security and regulatory checks on both sides of the border. So now, in some cases at least, it’s possible at long last to fly from Canada to a U.S. airport and change planes without having to retrieve your luggage and endure another security check.
But some really stupid redundancies remain.
Gary Doer, the Canadian ambassador to Washington, told the audience his favourite example of useless overlap is deodorant, which is subject to different manufacturing standards on each side of the border.
But deodorant alone doesn’t make for a sticky border. It’s because it’s too easy to find example after example, product after product, that the highcost backlog develops.
Not to mention the security checks that add time and cost to every trans-border transaction.
These kinds of impediments are particularly problematic in the case of Canada and the U.S., because the trade figures alone don’t fully reflect the extent of our economic integration.
There is a huge and growing number of products — almost a third of the volume of crossborder trade in 2009 — crossing back and forth repeatedly during the manufacturing process. It becomes impossible to identify them as either products of Canada or the U.S. — they are products of North America.
Yet we have far more border barriers than other big economies that are interdependent to a similar degree — Europe, for example, or China, or India.
The U.S. election has put trade issues on the back-burner in recent months, Sands said, but they need not stay there much longer.
The challenge, starting when the election dust settles, will be to focus the attention of the new Congress and the administration.