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Canada–US: The next generation

By Steve Coleman

February's declaration that the rules and regulations separating Canada and the United States at the border needed a thorough spring cleaning will sweep away a large mass of that red tape by the fall

Canadian Prime Minister Stephen Harper and US President Barack Obama announced December 7 that work will start at the highest levels to help create jobs south of the border and give Canadian citizens and businesses easier access to this country’s largest trading partner.

The deal includes all of the major recommendations government leaders received from CME earlier this year. Once the agreements start falling into place, both manufacturers and exporters can expect to see an improvement in their ability to compete in global markets.

"This announcement is not about a common border; it is about an integrated economy and our shared vision for good jobs, increased investment and a higher standard of living," explains CME President & CEO, Jayson Myers. "Canada and the United States do more than just trade with one another. We build things together. We innovate together. And now we must work together to create a collective future that puts manufacturers and citizens alike in the fast lane to prosperity."

The announcement included the creation of a new bilateral committee to ensure solutions to ongoing problems at the border don’t become lost in the bureaucratic shuffle.

“These agreements create a new, modern border for a new century,” said Prime Minister Stephen Harper, during the announcement.

“Together, they represent the most significant steps forward in Canada-US cooperation since the North American Free Trade Agreement.”

In addition to better screening programs for imported goods before they arrive in North America, the two countries plan to start using a “once inspected, twice approved” approach to customs. Where practical, duplicative or unnecessary regulations will be either eliminated or combined so all partners are reading from the same playbook.

The decision will create common North American standards for priority sectors such as automobiles, agriculture and health care.

The news that food will only have to undergo one inspection when the final product leaves the factory and will now avoid a second inspection in the US was welcomed by food producers.

"Maple Leaf Foods is very pleased that this initiative will continue to maintain high levels of food safety protection for Canadians and Americans but will lead to reduced border inefficiency and enhanced regulatory cooperation,” said Rory McAlpine, vice president of government and industry relations for Maple Leaf Foods Inc. “We look forward to participating in relevant pilot projects and demonstrating the value of this initiative to our company, our customers and consumers in both countries. We congratulate the Canadian and US governments for the progress they have achieved."

Harper and Obama made the initial announcement February 4,2011 , stating that two different groups would be formed to find solutions at the 49th parallel. One was the Beyond the Border Working Group (BBWG). The second was the Regulatory Cooperation Council (RCC).

Putting the “thickening” of the border that started following the World Trade Centre attacks in New York City on a diet is vital, said Obama. An estimated 90 per cent of trade between Canada and the US — $1 billion a day — arrives via roads, bridges and ports.

As a part of the new way of doing business, the two governments are also looking to eliminate outdated regulations that have been getting in the way of trade and job creation. The move is expected to eliminate billions of dollars in costly regulations for the business community on both sides of the border.

"The North American market, both for Campbell and the broader food and agriculture industry, is highly integrated,” said Kelly Johnston, vice president of government affairs for the Campbell Soup Company. “Many of our facilities in the US make products for the Canadian market, and vice versa.

“And while both Canada and the US have equivalent food safety and regulatory systems, they suffer from a tyranny of small differences that add costs and complexity to the manufacturing and movement of ingredients and products across the border. This initiative will help enhance security while improving the efficient use of resources and the movement of products, reducing costs at a time when commodities and other expenses are at historically high levels."

Setting up a larger perimeter around North America means people going on vacation or conducting business should have an easier time crossing the Canada-US border once they’re in North America. A lot of the leg work will be handled by plans to introduce improved cargo and security technology.

“Our two countries cooperate on international security issues very closely and very regularly,” Harper said. “That cooperation, at the same time, is governed by agreements and defined protocols and those will remain in effect.”

More than 100 million people crossed the border separating Canada and the US last year. Canadians also spend more money while they’re there than any other visitors, Obama said.

“I’m going to make a pitch,” Obama said. “We want even more Canadians visiting the United States and, please, spend more money here. We want to make it easier for frequent travellers and our business people to travel. We’re going to create a simplified entry-exit system.

“Canada is key to achieving my goal of doubling American exports and putting folks back to work. The two important initiatives we agreed to today will help us do just that.”

More than just encouraging Canadian tourists to pay a visit, negotiators agreed to look at an update of job descriptions under NAFTA. Provisions have also been made to make it easier for equipment repair personnel to cross the border to do their job.

CME, in conjunction with the Canadian Manufacturing Coalition and the National Association of Manufacturers in the US, played a key role in helping convince government leaders to introduce the changes, said Mathew Wilson, vice president of national policy, CME.

CME called on the two governments to introduce six specific improvements. All of them were introduced.

The list included:

Harmonizing and expanding trusted trader programs
Going to the most effective security and release procedures at the Canada–US border
Streamlining regulations and the reporting process government-wide in both countries, including a single-window reporting system for businesses on both sides of the border
Coordinating border security requirements between the two countries for goods coming into Canada or the US
Expanding and improving existing trade infrastructure
Making it easier for business personnel to travel between the two countries

“I’m happy to say that every single one of these is implemented in almost the exact manner that we requested it be implemented,” Wilson said. “That includes some of the big-ticket items we were told that we were crazy to ask for in the first place. On a scale of one to 10, this is about as close to a 10 as we’re going to see.”

Once things are in place, border guards will be looking at three different trading levels. The first is for unknown or unrecognized trade that wasn’t cleared ahead of time, while the second will consider goods moved with just the necessary security precautions taken. The easiest goods to get across will be for exporters who’ve invested in compliance ahead of time and taken the necessary security precautions before it reaches the border.

Planning it right means complex goods, such as automobiles or high-tech equipment, won’t be subject to multiple stacks of paperwork before they’re put together on the assembly line. If the work is done ahead of time through the new electronic system, getting a truck across the border could be as simple as scanning a bar code.

"IBM has heavily invested in supply chain security and trusted trader programs in both Canada and the US, and we are encouraged by the government's commitment to align regulations and regulatory reporting for border operations in these countries,” said Pat Horgan, vice president of manufacturing, development and operations for IBM Canada. “A harmonized system of border operations between the Canada and the US should simplify IBM's customs processing requirements, eliminating redundancies for duplicated entry processing and reporting for other government agencies."

Most of the major changes have been introduced as pilot programs, meaning they won’t have to go through Capital Hill or Parliament Hill to be implemented.

"The economic benefits of this strategy are more significant than most free trade agreements, and should signal that manufacturing is alive and well in North America," said Myers. "Complacency, however, is not an option. Government has laid the framework and now businesses must lead the way in turning a good idea into action and bottom-line results."

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