INDIANAPOLIS, Ind. – North American trade is being conducted in a “climate of suspicion and retaliation” and is not likely to improve anytime soon.
That was the sobering message from Dr. Laura Dawson, director of the Canada Institute, who participated in a panel on North American trade competitiveness at the Work Truck Show March 6.
“Unfortunately, this topic has become sexy in all the wrong ways,” she said of trade. “I’m sad to say I’ve never been so skeptical about our immediate-term prospects for cross-border trade. I’m not saying sell the farm, sell the plant and move to the hills, but things are really difficult and not likely to get much better in the short-term.”
She said manufacturers must be acutely aware of their supply chains and from where they are sourcing products. But that’s difficult for small companies running on thin margins. The U.S. Mexico Canada trade agreement (USMCA) won’t be implemented anytime soon, Dawson warned, but she said the agreement does contain some good trade facilitation elements. On the other hand, she said automakers will face a compliance nightmare under the new agreement.
And tariffs are not likely to ease up, according to Dawson.
“The fact there is a president who likes to use these tariffs and can use these tariffs means you’re going to continue to see that as a disruptive factor in your supply chains,” she warned.
The ‘buy local’ movement in the U.S. is a nice idea, Dawson said, “but it’s a better bumper sticker than it is economic practice.”
Canadian companies that supply U.S. government agencies should plan to set up shop in the U.S. or be shut out of procurement processes, Dawson warned.
“If you’re in Toronto and supplying U.S. government contracts at the state or federal level, it’s quite likely those contracts could be cut off at a moment’s notice,” she said.
While Dawson agreed China needed to be reined in, she said it would have been more effective for the U.S. to take a collaborative approach with its other trading partners, including Canada.
Jennifer Fox, vice-president of international trade policy and Canada relations, North American Strategy for Competitiveness (NASCO), highlighted four areas where cross-border trade between Canada and the U.S. could be improved upon.
She called for the harmonization of trusted trader programs and a reduction in the burdensome administrative requirements.
“There should be one application process for all partners involved,” she said, noting policy changes can make these programs better harmonized.
Likewise, greater consistency in e-manifest requirements is needed, Fox added. A trusted trader partner heading to the U.S. must submit the e-manifest half an hour before arrival at the border, but for northbound loads it’s an hour. Some loads are exempt. It’s too confusing for participants and drivers, Fox said.
“This is a program that was designed to enhance security and facilitate trade,” she said. “Harmonizing that program is going to make the border more efficient.”
She also expressed frustration that there are no RFID readers at border crossings into Canada, while they are present at all land ports of entry into the U.S. Trucks with transponders are able to save 90 seconds crossing the border, which at a crossing such as the Ambassador Bridge, where 12,000 trucks cross daily, adds up to a lot of time saved.
“Just a couple of readers and 90 seconds a truck would significantly expedite trade,” Fox contended.
She also would like to see FAST cards, which already have RFID transmitters embedded in them, used to expedite border crossings. She also said a tiered FAST program that’s mandatory would get those cards into every truck driver’s hands.
“We see these as opportunities to make the border better while working towards bigger, longer-term issues we need to tackle,” Fox said.
Daniel Ujczo, a trade lawyer with law firm Dickinson Wright, said manufacturers must now know where every single component on the vehicle is coming from. He said about 40% of vehicles manufactured in the U.S. won’t currently meet USMCA requirements. But he also doesn’t think the new trade agreement will be ratified anytime soon.
“The idea we’re going to get a trade deal done in this Congress when we couldn’t even keep the lights on – I don’t see it happening,” Ujczo said, referring to the government shutdown earlier this year. “But it doesn’t mean you can’t prepare.”
Have your say
We won't publish or share your data