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Sequestration could undo years of progress on improving Canada-US border

It was not that long ago that the land border between Canada and the US was viewed as a serious impediment to the secure and efficient movement of goods and people between the world’s largest bilateral trading partners.

It was not that long ago that the land border between Canada and the US was viewed as a serious impediment to the secure and efficient movement of goods and people between the world’s largest bilateral trading partners.

Trade between Canada and the US is not a reflection of low wages in either country or disparities in currencies, such as might exist in other trading relationships. (The Canadian dollar has softened a bit of late due to lower commodity prices, particularly for oil, but has been at or above parity with the US greenback for several years now).

Instead, the $1.6 billion in daily trade between the two countries is reflective of the level of integration between our two economies and our supply chains.

More than 80% of everything Canada produces is destined for consumption in the US. If they sneeze, we get a cold.

If one were to turn back the clock prior to the latest recession, the economies of both countries were running at full steam and trade in goods had reached an all-time high. Although cross-border carriers and drivers were the first to feel the effects of the spate of security measures introduced in the post 9-11 period, border agencies had staffed up, automation of border processes was being implemented and border infrastructure was being improved.

But the changes could not keep pace with the sheer volume of goods moving across the land border – the majority of which is carried in trucks. Fully two-thirds by value of Canada’s trade with the US is shipped by truck, including more than 80% of US imports into Canada.

Waits of several hours were common at many of the busiest land border crossings. This had a negative effect on the reliability and predictability of the North American supply chain. “Just in time” became “just in case” in some situations, while the cost of shipping goods increased. Many truck drivers – who were understandably frustrated over the delays at the border – started to look for domestic-only work. All of this ultimately harmed North American competitiveness.

The situation is not as dire today. Problems at the border remain, to be sure, but if one were to take an objective look at the situation, it would be difficult to conclude there has not been some improvement. While some of this may be attributable to a slow recovery – reduced commercial traffic caused by the recession and its aftermath has without a doubt reduced border delays – it is also true that automation has progressed, infrastructure has been improved in places and the growing pains associated with new border security initiatives are largely a thing of the past.

Hope for further improvement was raised with the Perimeter Vision Action Plan (PVAP) signed by President Obama and Prime Minister Stephen Harper last year.

Almost half of the initiatives agreed to in PVAP are intended to streamline cross-border movement by trucks. However, the potential for significant US expenditure cuts stemming from sequestration now threatens to undo the progress that has been realized in the past few years – as well as the anticipated improvements under PVAP.

US Secretary of Homeland Security Janet Napolitano, in testimony before the Senate Appropriations Committee, recently warned of a return to delays of four to five hours at the land border. Frontline US Customs and Border Protection staff members who process trucks will be furloughed, and overtime budgets to meet peak and unplanned demand will be slashed.

Commentators have warned that the bigger picture could see the signs of growth that recently appear to be taking hold in the US choked off and the economy tip back into recession.

We are painfully aware in Canada that this would drag us – the largest US trading partner – along with it. There is little Canadians can do but to prepare for the worst and hope the Obama administration and Congress come to an agreement in the coming weeks before the cuts really start to take effect. We have no partisan stake in this.

Neither country can afford to see things revert to the way they were at the border during the not-too-distant “bad old days,” when drivers could be delayed for hours on end, wasting fuel, missing delivery windows and exhausting allowable driving hours; where manufacturers and retailers had to build costly inventory in the face of uncertain border transit times; and frustrated carriers and drivers threatened to exit the cross-border market altogether.

We must have faith that the American people will implore their legislators to do the right thing. As Winston Churchill once said, “We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.”

This is a matter of urgency. The gains that have been made at the Canada-US border need to be preserved and built upon.

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