Bolder US-Canada Freight Processing Initiative Advised

The following is from the 15 February 2013 edition of Journal of Commerce.

The movement of goods and materials over the U.S.-Canada border is growing at healthy single-digit clip. Unfortunately, an initiative to make it easier for freight and people to cross the border isn’t progressing as rapidly.

The Beyond the Border initiative has had a modicum of success since President Obama and Prime Minister Harper launched the effort two years ago. Canada and the U.S., which are each other’s largest trading partners, eliminated double air cargo screening, and increased and harmonized the value thresholds for expedited customs clearance. Cargo is screened just once through pilot programs at the Port of Prince Rupert, allowing U.S.-bound rail shipments to reach their destinations sooner. The duo expects to launch similar programs for U.S.-bound freight at the Port of Montreal and Fort Erie, Ontario, this year.

But many in the trade community say U.S. and Canada aren’t moving fast enough, nor are they taking a bold enough approach. They point to how authorities are still tackling the initiatives of the first year of the plan despite that the program is in its second full year.

Their concerns are exacerbated by fears that a looming U.S. federal sequestration could stifle momentum, as Customs and Border Protection faces a roughly 8 percent, or $955 million, budget cut. And with the “low-hanging fruit” already picked, the steepest challenges are ahead, said Chris Sands, a U.S-Canada trade expert.

“They are making progress, but I don’t think they are getting enough done, and they aren’t being ambitious enough,” said Sands, a Hudson Institute senior fellow. “But they might be learning enough so that there will eventually be a big bang.”

To get a bigger “bang,” authorities need to attract more midsize shippers who can’t spare the time and money needed to enter trusted trader programs, Sands said. The pilot programs should be expanded to allow inspectors to clear goods at the plants of such midsize shippers. He worries that without a bold plan to get congressional support, the pilot programs could be trimmed or cut because of funding woes, or they could be continued without hope for expansion.

How cross-border moves are processed also needs to change, said Birgit Matthiesen, senior adviser for the Canadian Manufacturers and Exporters. Because about a third of cross-moves are intercompany shipments, authorities need to streamline data collection instead of processing each load on an individual basis.

“Now duties are pretty much zip (because of the North American Free Trade Agreement), but the cost of cross-border transactions of the (total) value of goods averages in the double-digits,” Matthiesen said. “Existing fees are increasing and new ones are being added.”  

Contact Mark Szakonyi at [email protected] and follow him on at twitter.com/szakonyi_joc.