OTTAWA, June 4 /CNW Telbec/ - Contrary to the images of trucks lined up
at the border, new border security policies introduced since 9/11 have not
reduced Canadian export volumes to the United States. The new border security
environment, however, has raised the cost of access to the U.S. market for
many companies, according to the findings of two new Conference Board studies
"Trade volumes have not changed because companies appear to be doing
whatever they must to get goods to market. But Canadian companies are bearing
higher costs as a result. And even small cost increases could cause companies
to reach a 'tipping point' at which it is less advantageous for production to
locate here in Canada," said Danielle Goldfarb, Principal Research Associate.
In addition to direct costs of complying with new border policies,
companies are dealing with indirect costs (such as higher cross-border
shipping costs or increased uncertainty about new border policies). In the
highly competitive global operating environment, even small new border costs
can have important negative economic consequences, and could prompt companies
to locate their production in the larger U.S. market and avoid border-crossing
entirely. Some companies said that they are not yet getting the full benefits
of fast-crossing lanes for pre-approved traffic, even though they made
significant up-front investments to become pre-approved.
With the right approach, however, Canada could be positioned as a
preferred place for companies to serve the U.S. market. Programs to separate
pre-approved and trusted cargo from unknown-risk cargo - if implemented more
effectively -- could get goods to market efficiently and securely.
To minimize the costs and maximize the security and efficiency benefits
of the post-9/11 border, governments need to:
- keep new rules simple and predictable and provide better, one-stop
information access to companies;
- provide adequate infrastructure, including a new crossing at Windsor-
Detroit, possibly dedicated only to Free and Secure Trade (FAST)-
approved traffic; and
- move towards greater alignment between Canadian and U.S. programs to
pre-approve cargo for border fast-tracking.
Businesses need to view upfront security program costs as an opportunity
to improve efficiency and ensure they are viewed as a trusted security partner
at the border.
Reaching a Tipping Point? Effects of Post-9/11 Border Security on
Canada's Trade and Investment is a joint project of the Board's International
Trade and Investment Centre (www.conferenceboard.ca/ITIC) and the Centre for
National Security (www.conferenceboard.ca/CNS). The research combines the
results of a unique, extensive statistical analysis of Canada's exports from
1988 to 2005 with the results of 60 interviews of border-crossing companies
and associations in late 2006. A separate companion report, Tighter Border
Security and Its Effect on Canadian Exports, describes the statistical
analysis in greater detail.
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