Key to boosting Canada trade: Untangle rules
by Brad Allen of Finance and Commerce
MINNEAPOLIS, MN -- Revamping a maze of regulations that governs trade represents "the largest economic opportunity since NAFTA for both Canada and the U.S., a Canadian official told business and government leaders during a panel presentation at the Federal Reserve Bank of Minneapolis Thursday.
Bob Carberry, Canada's assistant secretary for regulatory cooperation, described the $1 trillion in bilateral trade between the U.S. and Canada, including a highly integrated manufacturing and supply chain, as a "unique relationship" underpinning the largest bilateral trading partnership in the world.
But regulations on everything from seat belt standards for cars, to food and drug safety standards to visa approvals, baggage screening and security checks have not kept pace, he observed.
Carberry was in town as part of an entourage touting a bilateral effort, kicked off in 2009 by Canadian Prime Minister Stephen Harper and President Barack Obama, to coordinate regulations affecting the movement of goods and people between the two countries.
"It's taken decades to create the mire we're in," Carberry said. Implementing the 29 separate initiatives affecting border security, trade, law enforcement and critical shared infrastructure will take several years to untangle, he told the audience. "We know this isn't going to happen overnight."
Carberry could not provide an estimate for economic benefits but said that the program will benchmark the experience of a dozen companies to gauge cost savings from regulatory simplification.
Minnesota, with a 545-mile shared border, more than $14 billion in annual bilateral trade and 157,000 jobs tied to trade with Canada, has a lot at stake in the effort, Katie Clark, executive director of the Minnesota Trade Office, pointed out. Minnesota's $5.8 billion in exports to Canada, 29 percent of the total in 2011, tops the next four export markets combined, she pointed out.
Greater ease of access will also creates economic development for Minnesota border communities, Clark added. Pointing to a recent $657,000 state Transportation Economic Development (TED) grant to International Falls for construction of a multi-modal facility "next to the largest rail port in North America," she said that Nexus Distribution, a Chicago-based logistics firm providing repacking services for cross border trade, is planning a warehouse and processing facility on the site that will create 50 jobs.
Clark also urged the Washington and Ottawa panelists to consider Minnesota for pilot initiatives.
Frequent travelers between the U.S. and Canada may find relief as baggage screening gets streamlined. In addition, Deborah Meyers, director of Canadian affairs for the U.S. Department of Homeland Security, said she will recommend that the agency conduct "an enrollment blitz" in Minnesota for NEXUS cards, which enable pre-approved, low-risk travelers to cross the Canada-U.S. border quickly. Currently, Minnesotans have to travel to other cities such as Chicago or Atlanta to enroll.
While globalization is inevitable, the effective management of cross border movement of goods and services is not, said Eric Schwartz, Dean at the U of M's Humphrey School of Public Affairs. Successful regulatory coordination between the U.S. and its northern neighbor can have far reaching global benefits, he pointed out.
Because of the close cultural and economic ties between the two countries, Schwartz said cross border regulatory simplification presents "an ideal laboratory for evolution of lessons learned... that can, and should, be applied elsewhere in the world."
If the two countries can sustain an open border while dealing with the changed environment post-9/11, they can provide an important model for joint security and law enforcement coordination elsewhere, he said. But Schwartz cautioned the audience that political and popular support will be important to maintain the open border when security challenges inevitably arise.