Effects Of The New Canada-U.S. Border Deal

By Manish Sahajwani | January 05, 2012 AAA
Effects Of The New Canada-U.S. Border Deal

Canada and the United States have decided to take a joint approach to their border protection by entering into a new border security deal, expected to be unveiled in the coming weeks. The deal is primarily aimed at protecting the two nations against terrorism and easing up the cross-border traffic. The agreement labeled as "Beyond the Border Action Plan" is expected to streamline and simplify the process of cross-border transport for both goods as well as people. This deal could take the already beneficial partnership between Canada and the U.S. to the next level.

TUTORIAL: Economic Indicators

The U.S. and Canada have the largest bilateral trade and investment relationship in the world, with total trade between the two countries crossing $1 trillion in 2010. About 300,000 people cross the U.S.-Canada border every day and the trade between the two countries is over $1 billion every day. A large number of people make same-day visits to the U.S. for shopping, among other activities.

The two countries also share a lot of infrastructure, such as bridges and electricity, etc. The Canadian federal government estimates that it loses about $16 billion because of bureaucratic processes and cross-border problems in the current system. A deal like this will help the government eliminate supply chain inefficiencies that arise due to regulations, security threats and natural calamities that could disturb the economies on either side of the border. (For a forex article linking the American and Canadian dollars, check out Canada's Commodity Currency: Oil And The Loonie.)

The Beyond the Border Action Plan will help in addressing threats, facilitate trade, propel economic growth and create jobs. The plan focuses on four key areas, namely addressing threats early, trade and economic growth, building on existing border enforcement programs, and emergency and cyber infrastructure.

Let's take a look at a few key initiatives that have a direct impact on the economy and businesses in the two countries.

Alignment of Overlapping Regulations
The United States and Canada have many different overlapping regulations on a variety of products, such as food and vehicles, that increase costs and slow down the trade process. The new deal will take measures to reduce this redundancy and thereby reduce costs and trade time for everyone.

Streamlining of Border Processes
Under the new deal the government will implement new "cleared once, accepted twice" pre-clearance policies, where the goods once cleared for customs need not be cleared again on the other side of the border. The government will also introduce a single window for electronic submission of documents. The documents submitted through this single window will fulfill the documentation requirements of both the countries.

There are also plans for a trusted trade program under which some companies will be given "trusted" pre-clearance status. Under this initiative, goods will be pre-cleared (sometimes at the production facility), and placed in sealed containers for transport. This will mitigate the need for inspecting the goods at the border. The government will also introduce more dedicated lanes at the border for trucks, which will result in fewer delays in transporting goods.

Information and Intelligence Sharing
The two counties have also agreed to share more information and intelligence, which will make the border more efficient. With this kind of information sharing, most of the screening can be done away from the border. This will enhance their tracking of travelers and identifying threats early and will also allow low-risk travelers to be pre-approved, so that they can travel across the border with less hassle.

Integrated Entry-Exit System
The government will also introduce a single entry and exit system. Under this system the two countries will share biographical information on citizens, permanent residents and others when they enter one country and exit the other. This will make it easier to monitor the visitors crossing the border; an integrated entry and exit system can enhance security, improve mobility and reduce costs.

The Bottom Line
All this, of course, means that there would be greater information sharing between the two countries, which is turning out to be a cause of concern for many. There are concerns about the larger issue of safety of national sovereignty for both countries. It will require the integrity and understanding by both governments, here on, to ensure that trust is not abused. In a global situation where co-operation among countries is becoming paramount, the making and implementing of this cross border deal, with greater information sharing, is only just the beginning of a long road. (For more discussion on deals struck over the American-Canadian border, read NAFTA's Winners And Losers.)

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