Rocky Mountain trade corridor.

• Author: Swanson, Larry D.
• Position: Rocky Mountain States

Implications for Transportation Planning in Montana and the Rocky Mountain West

Fundamental changes now underway may dramatically redefine economic life in Montana and usher in a new economic era for the state and region. These changes are tied to expanding cross-border trade and commerce between Canada and the United States under the Canada-U.S. Free Trade Agreement adopted in January 1989. Under an expanded "North American economic community," as outlined under the proposed North American Free Trade Agreement (or NAFTA), this relationship would include Mexico as well.

Growing north-south, cross-border economic interchange in North America will have its greatest effects in border regions. And Montana is the only state that shares a border with three Canadian provinces. Furthermore, since adoption of the U.S.-Canada FTA, trade between the two countries has expanded most between western states and provinces. This trade expansion has been focused in a few regional "corridors" linking major suppliers and their cross-border markets. One of these is the "Rocky Mountain Trade Corridor."(1)

Besides the "border-opening" initiatives contained in these trade agreements, another new federal policy initiative is helping to expand business relations across North American borders. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) is focusing increased attention on transportation infrastructure needs in border regions and on transportation systems used in moving goods and people involved in cross border trade. If the United States and its neighboring trading partners are to contend in an increasingly competitive worldwide economy, trading within North America must be done efficiently. Under ISTEA, up to $160 billion will be spent nationwide on transportation infrastructure (if fully funded), with transportation deficiencies in continental trading corridors receiving considerable attention.

Economic Internationalization

The driving force of economic change in the past two decades has been "internationalization"--and its impact is only intensifying. The economic spheres in which businesses operate are expanding outward and regional marketplaces are growing. This is reshaping markets of retailers and service providers and altering location needs of manufacturers, processors, and handlers of goods and commodities.

While this process of internationalization is often confusing (if not mysterious), it does have certain patterns and characteristics. Nations are finding it more workable to expand their economic horizons incrementally, negotiating trade arrangements with one country at a time or with a few close neighbors. This is apparent in the formation of continental or multination trading blocs around the world, including the European Economic Community (EEC), the Association for Southeast Asian Nations (ASEAN), and others. North America's version of this tendency is outlined under NAFTA.

In the midst of movement toward economic internationalization and regionalization, there's no single trading relationship in the world larger or more important than the one between Canada and the United States. The bar chart in Figure 1 shows U.S. "goods trade" (commercial shipments of goods and commodities between countries) with other nations. While U.S. business executives and international trade policymakers are often fixated on trade with Japan, U.S.-Canada trade is actually more than 25 percent greater. And, looking at exports only, U.S. exports to Canada exceed exports to Japan by over 70 percent.

U.S.-Canada trade is not only large, but growing-up about 35 percent since 1987 (an increase of over $45 billion). The United States' third-largest trading partner is Mexico--our other North American neighbor--and U.S.-Mexico trade has increased 85 percent in the last five years (an increase of nearly $30 billion).

Under NAFTA, a continentally-based economy will slowly take shape, just as in Europe under the EEC. As it does, economic activity in North America will take on new and different forms, particularly in border regions. New patterns of north-south economic and business relations will develop across national boundaries. The spatial forms these relations take will be particularly important for businesses and communities in border regions like Montana.

Settlement and development of both Canada and the United States largely occurred in an east-to-west fashion. And, the national economies of both countries remain heavily-oriented for east-to-west and west-to-east movement of goods and people involved in interregional trade and commerce. However, under NAFTA, a North American economy will gradually emerge, largely "north-south" in its orientation.

Montana has a vastly different geoeconomic position within a continentally-based economy than its historical role within a largely east-west oriented national economy. In the latter, as a Northern Tier state on the periphery of most interregional trade and commerce, it has played the role of a sort of end-point supplier of raw materials and commodities. The most obvious effect of making the U.S.-Canada border more economically "invisible" is that Montana will no longer be on the economy's periphery--it will be internal to it. What's more, the provinces to the north that become part of our regional marketplace (as we become part of theirs) include Alberta, British Columbia, and Saskatchewan. Much of this region of Canada has a relatively affluent and fast-growing population. It also has several world-class cities.

Current Patterns of U.S.-Canada Trade

What form are these emerging north-south patterns of cross-border economic interchange likely to take in the West? In examining the current composition of U.S.-Canada goods trade, we find a heavy concentration in manufactured items, particularly motor vehicles and parts, moving in both directions. This reflects the longstanding U.S.-Canada "Auto Pact" and the presence of a large, regionally-focused, transborder auto industry in Ontario and the Great Lakes region. Traditionally, this has served to focus much of U.S.-Canada trading in the East.

The map in Figure 4 generally illustrates where goods traded by Canada and the United States cross the border. In 1990...