What will the new U.S. / Canada Border Security and Trade Agreement do for Shippers and Truckers?

For the past decade, the Canada-U.S. model of economic integration has been deteriorating - - a victim of a border chocked with traffic, an overreaction to the 9/11 attacks, steep fees and erratic regulation.  FAST trade has become thick trade.  Canada – U.S. trade peaked in 2000 and has stagnated since.  Between 2001 and 2010, Canada’s dominant share of U.S. imports has fallen precipitously across a range of products - - from furniture and electrical equipment to printing, paper and plastics.

Market share worth billions of dollars now belongs to China.  This reduction in efficiency came during a period of expanding global trade as China in 2009 eclipsed Canada as the leading exporter to the United States. 

The new deal that was announced in December 2011 by President Obama and Prime Minister Harper addresses America’s concern with security and Canada’s need to facilitate trade.  Rather than publish a comprehensive document as was done with the North American Free Trade Agreement, this new deal basically consists of a press release and a set of good intentions.  It has been called the North American Border Security and Trade “Trust Us” Deal.  Since the United States is in the midst of an election year and since some of these initiatives will require congressional approval and funding, time will tell as to how many of these good intentions become reality.

The good news is that there seems to be a consensus that a number of these action plans will take effect over the next few years.  These are some of the specific programs that will have a direct and positive effect on trade and transportation.

Harmonize and Improve “Trusted Trader” Programs

The idea is to let companies fill in one application to participate in a variety of “trusted trader” programs which allow regular exporters to get their goods across the border more quickly.  As an example, there is expected to be mutual recognition and hopefully harmonization of the two main “trusted trader” risk assessment programs, the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) and the Canada Border services Agency’s Partners in Protection (PIP).  The intent in the future is if a company applies for participation in either program and is approved, this will permit participation in both programs.  A pilot project is planned.

Improve Pre-Clearance and Expedite Border Crossings

The intent is to expedite border crossings with commercial traffic by providing more dedicated lanes and technology and measuring and posting wait times ahead of border crossings.  Carriers that are not FAST approved will have to wait in line at a designated area away from the border so as to not interfere with the smooth flow of goods moving with approved carriers.  There are also pilots planned for Montreal and Prince Rupert, B.C. to clear cargo once at these first points of entry.

Create Common Regulation and Streamline movement of Food Products across the border

Another issue that has created inefficiencies in production and trade has been the varying food regulations in the two countries.  For example, Canadian companies are permitted to produce 19 ounce cans of certain canned fruits and vegetables while they are not allowed to manufacture 16 ounce cans, the preferred size for U.S. consumers in Canada.  The two countries have set up a council to address the so-called “tyranny of differences” and to make sure regulations and standards don’t block the movement of goods and services across the border.  Much of the emphasis will be on food and agricultural products.  Another pilot will test whether it makes sense to cut back on the inspection of agricultural and food products that have a good record of compliance.

“This - - - (Trade and Security) - - - 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,” said CME president and CEO Jayson Meyers.  “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 agreement did not address such issues as the lack of standardization of truck weights and Cabotage.  Nevertheless, the new pact or more correctly, this series of agreements will take much work to implement effectively and convert into bottom line results for shippers and truckers but they have great potential to improve cross-border trade between Canada and the United States.