Beyond the border: a new chapter in North American trade.

Author:Owens, William L.
Position::35th Annual Henry T. King Conference: The US-Canadian Border Action Plan
 
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INTRODUCTION

In today's increasingly connected and global market, North -America's ability to move pre-approved, low risk travelers and goods across its borders both safely and efficiently is crucial to the continent's economic competitiveness. The development of technologically advanced processes and enhanced regulatory collaboration along the United States-Canada border is critical to expanding American-made goods and services in consumer markets in Canada and throughout the world.

On December 7, 2011, President Obama and Canadian Prime Minister Harper announced an Action Plan for Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness ("Plan"). (2) This joint partnership between the United States and Canada will expedite the movement of people and goods across the northern border while enhancing security. The Plan focuses on four key areas of cooperation: 1) addressing threats early; 2) trade facilitation, economic growth, and jobs; 3) integrated cross-border law enforcement; and 4) critical infrastructure and cybersecurity. (3) Responsibility for implementation and oversight of the Plan falls to the Beyond the Border Working Group, which is composed of representatives from the relevant federal agencies of both countries. (4) The two governments also commit to enhancing the existing Binational Port Operations Committees by creating additional local committees at the eight international airports in Canada that provide U.S. pre-clearance. (5)

The Plan is a significant milestone in the United States-Canada relationship. Canada is the United States' largest trading partner and an important NATO ally. The 5,525-mile shared border is the longest international border in the world. (6) In 2010, bilateral trade between the United States and Canada rose to nearly $645 billion with more than $1.7 billion crossing the border each day. (7) Last year alone, Canada imported more than $280.9 billion in goods and $56 billion in services from the United States, making it the nation's largest export market and the top export destination for 35 U.S. states. (8)

This trading relationship supports an estimated eight million U.S. jobs, with Canadian-owned companies responsible for employing over 500,000 American workers. (9) In the 21st congressional district alone, there are 13 border crossings that are responsible for the movement of more than $13 billion in annual bilateral trade, supporting nearly 20,000 jobs in the region and more than 500,000 jobs across the State of New York. (10) The movement of commercial goods and people across the northern border is one of the critical issues we face in terms of economic development from Jefferson County, New York to Clinton County, New York and throughout the Northeast Corridor of the United States. Conversely, the risks of not investing now in greater efficiencies, infrastructure, and technological improvements at the border will cede economic opportunities to competitors in the European Union and the comparatively high growth economies in the so-called BRICS (Brazil, Russia, India, China, and South Africa). According to Garry Douglas, Executive Director of the North Country Chamber of Commerce in Plattsburgh, New York, the Plan, represents a "major commitment to addressing threats beyond the U.S.-Canada perimeter, relieving pressure on our shared border and enhancing the flow of goods and people." (11) Clearly, it is critical that policy makers and private industry stakeholders understand and engage in implementation of the Plan.

One of the most significant initiatives under the Plan is a commitment to negotiate a pre-clearance agreement for land, rail, and sea. This agreement will provide the legal framework necessary for U.S. Customs and Border Protection ("CBP") and the Canada Border Services Agency ("CBSA") to carry out cross-border traffic inspections. (12) The central goal of the Plan is to move both countries in the direction of an integrated entry-exit system whereby clearance and inspection by authorities in one country will ultimately serve as entry into the other. (13) Under this framework, generally referred to as inspect it once, clear it twice, inspections of certain low-risk passengers and goods can take place before they reach the physical border, making cross-border travel more efficient and cost-effective for goods and travelers alike.

Part I of this article evaluates the Plan's impact on inspecting and clearing cargo that arrives in North America, including several new pilot programs; harmonization of supply chain security programs; and efforts to bring greater transparency and harmonization to fees assessed at the border. Part II discusses the Plan's impact on so-called Trusted Traveler Programs, which facilitate the movement of low-risk travelers across the U.S. border, and proposals to lower wait times. Part III reviews the proposed joint investments by the United States and Canada in infrastructure and technology at border crossings.

  1. EXPEDITING CARGO

    1. Pilot Programs

      The Plan establishes a number of pilot projects on both sides of the border that move the two countries in the direction of a unified North American cargo inspection system. An oft-cited example of binational regulatory coordination is the Trans-Tasman Mutual Recognition Act of 1997 between the governments of New Zealand and Australia. (14) Under this agreement, goods that have been approved by federal regulators from either government can be sold in both countries. (15) While the Plan is not quite as ambitious, it will achieve similar aims in terms of lowering costs for businesses, providing greater choices for consumers, and enhancing cooperation between our respective regulatory authorities.

      Several pilot initiatives intended to harmonize the inspection process for cargo arriving to North America by sea. For example, marine cargo arriving at the shores of Canada destined for the United States by truck will be vetted and examined once by the Canadian border authorities and cleared for entry into the United States. (16) Currently, these goods must undergo a second inspection at the physical border. The Canadian government also plans to build new cargo examination facilities in Halifax and Vancouver and implement a truck cargo facilitation project in at least one location in Canada. (17) In October 2012, an integrated marine cargo screening pilot was established in Prince Rupert, British Columbia to inspect marine cargo arriving to Canada that is destined for Chicago by rail. (18) Similarly, the U.S. government will launch pre-vetting and examination pilots to inspect cargo arriving at a major U.S. port and destined for Canada by truck. (19)

      In addition to expediting the movement of cargo arriving by sea, there are several initiatives benefitting the meat, pharmaceutical, and food industries. For the meat industry, the Canadian Food Inspection Agency and the U.S. Food Safety and Inspection Agency will initiate a one-year pilot for advance review and clearance of official certification and alternative approaches to inspecting imported meats. (20) The Canadian government has also conducted a one-year pilot to enable certain participants from the processed-food sector in the United States to provide transactional post-entry data to Canadian regulatory authorities in return for expedited clearance at the border entering into Canada. (21) The two governments will also initiate pilots to lower inspection rates for the agri-food and pharmaceutical sectors. (22) In addition, the Canadian Food Inspection Agency has also established a working group with its U.S. counterpart, the Animal and Plant Health Inspection Service, and completed a final draft version of a wood packaging material feasibility study in December 2012. (23) The study is intended to identify and address any policy, program, or operational changes needed to move inspections for wood packaging material away from the U.S.-Canada border to the perimeter. (24)

      To measure the progress of these pilot programs, the two governments plan to measure increased membership for Trusted Trader Programs, examination rates for program participants, and the volume of goods that cross the border. (25) While cargo tampering between initial inspection and arrival at the border is an obvious risk, this issue can be addressed by ensuring the container remains sealed throughout the process. The federal agencies with oversight authority will be responsible for ensuring goods are not tampered with once they have been inspected by customs authorities and regular audits should be conducted to ensure compliance.

      Some industry stakeholders have taken issue with a perceived lack of attention to establishing new pre-clearance programs for air cargo, noting the Plan primarily focuses on expediting the movement of people and goods by land and sea without acknowledging the growing air traffic business. (26) Over 27 billion dollars worth of goods were imported and exported by air between Canada and the U.S in 2010, an increase of approximately 3 billion dollars over 2009. (27) However, steps have been taken under the Plan to expedite the inspection process for air cargo arriving in North America. On May 31, 2012, a new mutual recognition initiative was announced that enables both countries to recognize each other's air cargo security programs. (28)

      Under this new arrangement, cargo shipped on passenger aircraft will be screened only at the point of origin, saving shippers the time and money involved in rescreening shipments a second time when they arrive at the destination. (29)

      A new single online window that will allow importers to electronically submit all information to comply with customs and other regulatory authorities will also improve efficiency for shippers and customs brokers. (30) According to some industry estimates, approximately seventy-five percent of all cargo currently requires approval by multiple federal...

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