Thread: Border snarls put brakes on Canada trade

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Border snarls put brakes on Canada trade
By Bernard Simon in Toronto
Financial Times
Updated: 9:10 p.m. PT Sept 3, 2007
At midday last Wednesday, the line-up of cars, trucks and buses waiting to cross the US border at Detroit stretched the full length of the 1.6km tunnel from Windsor, Ontario, on the other side of the Detroit River.

Such bottlenecks – frequent, but unpredictable – have become a big headache for the North American automotive industry, jeopardising the decades-long integration of US and Canadian assembly plants and their component suppliers.

"Free trade is being threatened by a thickening of the border," says Gerry Fedchun, president of the Canadian Automotive Parts Manufacturers' Association.

Linamar, an Ontario-based supplier, has set up a separate trucking division for its US operations. "It does help us to manage the border more easily," says Linda Hasenfratz, chief executive. "One day we may sail across, and the next day we may have a two-hour wait."

Mr Fedchun says he knows of three Canadian companies that have established operations in the US rather than risk costly border delays.

A 1965 trade agreement, known as the Auto Pact, laid the groundwork for the integration of the US and Canadian automotive industries. It was widely cited as a model for the 1989 free-trade pact between the countries.

But tighter border security since September 2001, new regulations and inadequate infrastructure have imposed new barriers.

"Security trumps trade every time," Mr Fedchun says. He cites a $5 food-inspection fee levied by the Food and Drug Administration on every truck crossing the border.

The Ontario Chamber of Commerce complained in a report last week that "as [governments] around the world are looking to decrease trade and travel barriers, the Canada-US relationship seems to be heading in the opposite direction".

The two governments have implemented some measures to alleviate congestion. A programme known as Free and Secure Trade (Fast) allows speedier customs and immigration clearance for pre-approved shippers, carriers and truck drivers.

"We have helped design processes that meet our requirements," says Dave Hodgson, Chrysler's vice-president for supply.

The carmaker ships 1,500 truckloads of vehicles and parts each day across the Ambassador Bridge, another Detroit border crossing. It has set up a central logistics and materials supply group at its head office to monitor trucks, along the lines of an air traffic control system.

Linamar has installed satellite radios in its trucks. Mr Hodgson says Chrysler has also forged closer relationships with relevant government agencies.

The industry is pushing for more electronic customs clearance before shipments arrive at the border. It also wants what Mr Fedchun calls a driver's licence "on steroids" that doubles as a passport.

The risk is that many companies will avoid the border rather than wait for such initiatives to bear fruit.

Copyright The Financial Times Ltd. All rights reserved.
URL: http://www.msnbc.msn.com/id/20576496/


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"Security trumps trade every time," Mr Fedchun says. He cites a $5 food-inspection fee levied by the Food and Drug Administration on every truck crossing the border.

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