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Paul Vandevert International Trade Attorney Office of General Counsel

CANADA-UNITED STATES LAW INSTITUTE ANNUAL CONFERENCE 2008 THE WORLD’S LONGEST UNDEFENDED BORDER: GATEWAY OR CHECKPOINT?. Paul Vandevert International Trade Attorney Office of General Counsel. The Canada-US Supply Chain in the Era of Global Economic Competitiveness.

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Paul Vandevert International Trade Attorney Office of General Counsel

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  1. CANADA-UNITED STATES LAW INSTITUTEANNUAL CONFERENCE 2008THE WORLD’S LONGEST UNDEFENDED BORDER:GATEWAY OR CHECKPOINT? Paul Vandevert International Trade Attorney Office of General Counsel The Canada-US Supply Chain in the Era of Global Economic Competitiveness

  2. Overview: Ford & the Auto Industry Depend on an Open Border Between US & Canada • Brief History of Ford in US & Canada • History of Free Trade between US & Canada • Factual Profile of Ford as Trader in US & Canada • Trade & Security • Security Measures: Which Are Most Effective?

  3. Ford Motor Company: A Brief History • Ford Motor Company founded in the United States in 1903; began business in Canada in 1904 • Today Ford has four recognized brands in addition to “Blue Oval” • Manufactures vehicles on six continents and all major automotive markets • Ford brands family distributes vehicles in over 100 countries.

  4. Free Trade Between Canada & the US The Auto Industry Pioneered and Enjoys Benefits of Free Trade between Canada and the US • Automotive Products Trade Agreement of 1965 (APTA) • Conditional free trade for automotive industry imports to be used for production of new motor vehicles. • Recognized close integration of supply base and OEM customers in Canada and the US and facilitated growth in automotive industry • Canada-US Free Trade Agreement (1989) • Expanded free trade from automotive sector to all sectors • Free trade in qualifying goods immediately for auto sector – conditions dependent on use eliminated • All US and Canadian qualifying goods duty free in 1998 • North American Free Trade Agreement (NAFTA 1994) • Expanded free trade to Mexico • Recognized and facilitated complete integration of auto industry in North America as a single market • Duty free trade for all qualifying goods in all 3 countries in 2004

  5. Ford as Trader in Canada & US • Ford makes over 200,000 entries a year into US • Ranks in top 5 US importers by entry volume • Over 163,000 entries from Canada • Over 156,000 entries through two US ports: Detroit & Port Huron • 20 Canadian suppliers account for over 92,000 of Ford’s entries • Ford’s total entered value per year more than US$15 Billion • Ranks in top 5 US importers by entered value • Nearly US$8 Billion of entered value comes from Canada

  6. Of Trade and Security TRADE • In all of North America, Ford saves* over $1 Billion in duties every year under NAFTA * Volume of trade would not exist without NAFTA • Effective duty rate for Ford on goods from Canada is 0.1%, • Ford effectively claims duty free imports under NAFTA on over 99% of all entries made SECURITY • Ford was one of the original 7 “charter” members of C-TPAT • Signed MOU with US Customs in February 2002 • Recently revalidated as a Tier III importer in C-TPAT • Ford carriers participate in C-TPAT & FAST • Through Industry trade groups Ford has supported SPP and other North American security initiatives

  7. Security Measures: Risk Assessed v Non-Discriminatory? Risk Based Assessments • In risk based assessments, Customs will make security threat determination based on level of security risk posed by shipper, importer or shipment • C-TPAT lays the foundation for risk based assessment of security threat • In C-TPAT, importers such as Ford provide Customs with data and information on their entire supply chain, which Customs validates. • Information provided covers importer, suppliers, carriers and other supply chain service providers who may handle shipment (freight forwarders, consolidators, Customs brokers) • Based on validated data from C-TPAT participants, Customs could systemically rate security risk of inbound shipments and segregate low risk shipments, leaving higher risk shipments for additional scrutiny

  8. Security Measures: Risk Assessed v Non-Discriminatory? Non-Discriminatory Assessments • Non-discriminatory security assessment methods treat all importers, shippers and shipments the same • Proposed Importer Security Filing rule (aka “10+2”) is non-discriminatory security assessment method. • All importers, regardless of risk posed, required to file same amount of data with CBP 24-hours in advance of loading of shipment. • ISF threatens to close border without adequate evidence that security will be enhanced • While rule would initially apply only to ocean shipments, CBP has already announced that ISF rule will be expanded very soon to all modes of border crossing. • Significant number of Ford’s suppliers are within 30 minutes of the border

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