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

Doing Business Across the Canada-United States Border: Gateway or Checkpoint?. David Bradley CEO, Canadian Trucking Alliance President, Ontario Trucking Association April 18, 2008 Cleveland, OH. Federation of provincial trucking associations 4,500 + member companies 150,000 employees.

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

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  1. Doing Business Across the Canada-United States Border:Gateway or Checkpoint? David Bradley CEO, Canadian Trucking Alliance President, Ontario Trucking Association April 18, 2008 Cleveland, OH

  2. Federationof provincial trucking associations • 4,500 + member companies • 150,000 employees

  3. Canada-US Trade Still world’s 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 US$1,250 Canadian parts Canada’s Economic Reality Exports to US = 25% of Canada’s GDP US accounts for >70% of Canada’s exports > one-half of Canadian agric. exports to US Canada’s trade/GDP ratio = 80%; US =25% Every $ billion in trade = 10,000 jobs

  4. Canada is: Top US export market > 60 yrs Destination for 1/4 of US exports Top export market for 39 states; top 3 for 8 others US’s #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 >½ of auto exports More agricultural exports than anywhere else ($10 billion, $400 pcpa) Canada-US Trade is a Two-Way Street

  5. The Vital Connection:Reclaiming Great Lakes Economic Leadership in the B-National US-Canadian Region:Brookings Institution, March 2008 • Combined population of bi-national region @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 >62% of Canada-US two-way trade • Region accounts for @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”

  6. 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 • @20,000 enter US from Canada every day • Trucking an essential component of the North American supply chain

  7. 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?

  8. 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

  9. 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

  10. The Vital Connection:Reclaiming Great Lakes Economic Leadership in the B-National US-Canadian Region:Brookings Institution, March 2008 • Measures to tighten border security “have complicated and slowed the flows across what was once the world’s 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.”

  11. 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

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