The border is an expensive barrier, new study concludes
<a href=http://www.canada.com/vancouversun/columnists/story.html?id=893a1a6b-2c96-464d-8049-eca34d3e9dfa>Vancouver Sun </a>
Thursday, June 14, 2007
The Canada-U.S. border is not our friend. That's the conclusion of a new Fraser Institute study written by author and Simon Fraser University political scientist Alexander Moens.
Canadian nationalists traditionally argue that the border is our last defence against cultural and economic absorption by the all-powerful, politically domineering U.S.A.
But Moens presents a different, more pragmatic perspective, which has resonance in view of the panic associated with long waits for passports to enable Canadians to keep flying freely to their favourite destination.
Moens uses facts and figures to make a case that "there is growing concern and partial evidence that border costs are too high and that the border in effect is turning into a growing barrier to trade."
The 32-page study, titled Canadian-American Relations in 2007, Recent Trouble, Current Hope, and Future Work, points out how dependent we are for economic survival on that border.
According to the Department of Foreign Affairs, roughly 52 per cent of Canada's entire 2006 gross domestic product was attributable in some form to the $709 billion in trade we did with the U.S.
Since the North American Free Trade Agreement was signed in 1989, commerce between the two countries has grown by 120 per cent.
The best news is that we have an enormous trade surplus with the U.S. that buffers us from ill effects of the large trade deficit we run with the rest of the world.
Indeed, Canada has a $50-billion trade deficit globally but comes out fine because of the $100-billion trade surplus we enjoy with the U.S. Americans buy just shy of 80 per cent of everything we export.
Clearly, "Canada has an enormous stake in the free flow of trade and investment to and from the U.S."
The border is an impediment in this regard. It imposes costs in terms of brokerage, duties, customs administration and waiting times for shipments that must traverse the continental barrier. No one has ever precisely pinpointed the cost but, based on a variety of studies, Moens estimates it to be roughly $10 billion annually.
An example: A North American car, produced in Canada or the U.S., entails seven trips across the border during the course of its creation. Associated compliance requirements and delay tack on about $800 to the cost of each vehicle.
Warns Moens: "Such costs threaten to undo the gains achieved by highly integrated production processes and make North American producers less competitive in comparison to offshore production."
The author laments the deterioration of the political relationship between the two countries during the Chretien and Martin governments, but says there is now room for optimism when it comes to bilateral renewal.
Prime Minister Stephen Harper has nurtured a more positive relationship with Washington which would enable Canada to move ahead with negotiations on several fronts to ease border complications.
Moens recommends Ottawa "would be well advised to use the new momentum to push for comprehensive bilateral agreements in security and defence."
Specifically, he's advocating a free flow of trade and people -- including labour -- across the border. Moens envisions a harmonized system of visas and refugee and immigration rules, and a border managed cooperatively by the two countries.
The political scientist also favours the forging of a binational defence treaty to create a single Canada-U.S. command structure covering air, sea, space and land. Any threat to security would be addressed jointly.
A move towards greater commercial and security integration has been under way since 2005 when leaders of Canada, the U.S. and Mexico struck working groups, reflecting business interests, to recommend potential efficiencies and a route to more robust commercial integration.
The low-profile enterprise, under attack from an assortment of nationalists, is known as the Security and Prosperity Partnership. Moens prefers to see a partnership between Canada and the U.S. only.
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Today at 5 p.m., Simon Fraser University is sponsoring a forum featuring John Dickson, a senior U.S. embassy official in Ottawa. The Potential of the Security and Prosperity Partnership for North America will be discussed at 515 West Hastings, Room 7000. Information: 604-642-6657.