New realities at the Canadian-U.S. border.

• Author: Beatty, Perrin

The September 11, 2001 terrorist attacks against the United States brought traffic at the border to a screeching halt and Canada's economy grinding to a standstill. In the immediate aftermath of the attacks lineups stretching to 12 miles and delays of up to 18 hours were the norm at the 49th parallel. Traffic volumes fell significantly, some Canadian plants were forced to temporarily reduce or stop production, consumer and investor confidence declined sharply. This article looks at what Canadian industry has done to overcome the challenges posed by new realities at the Canada-U.S. border. It also examines the larger issue of how to best define Canada's place, as a sovereign nation, within an increasingly integrated North American economy?

A million dollars of trade takes place between Canada and the United States every minute--$1.7 billion a day--and there are 200 million border crossings a year. To put it in perspective, the U.S. does more two-way trade across the Ambassador Bridge between Windsor and Detroit than it does with any other country. We sell more of our industrial output--63%--to the United States than we consume at home, making Canada our own second-largest market. In total, the Americans buy about 83% of our exports of goods and services, amounting to 38% of our GDP. We are also increasingly dependent on the U.S. for our imports. Over 72% of the goods and services we import, amounting to 30% of our GDP, come from the United States. What is more, the U.S. is Canada's primary source of foreign investment. It accounts for 64% of foreign direct investment here and 58% of total foreign investment stocks in this country.

Canadian prosperity clearly depends on our trading relationship with the United States. Canada-U.S. trade is the source of hundreds of thousands of Canadian jobs, and secure access to the U.S. market is a key factor in attracting vital foreign investment. In turn, that relationship depends on the efficient flow of goods and people across our common border.

Border efficiency is a bottom-line issue for business. Time is money, and border delays represent major costs. Those costs are mounting as more companies adopt just-in-time production and delivery systems that result in less inventory at the business site and a greater reliance on the truck, boat, plane or train as the inventory warehouse. If the border becomes a barrier to the efficient movement of goods and people, it will choke off our exports and stem the flow of foreign direct investment into Canada. Our standard of living will fall dramatically.

Following September 11th the Canadian business community moved swiftly to ensure the free flow of commerce between Canada and the United States. Our goal was not to return to border conditions as they were before the attacks but to improve them. Steady and dramatic increases in cross-border traffic, combined with benign neglect on the part of governments, had chipped away at border efficiency over the years, causing serious problems. A study at one of Canada's busiest border crossings, Fort Erie, Ontario, completed before September 11th estimated that transportation delays at that crossing alone were already costing shippers $2.5 million a day.

The Canadian Manufacturers and Exporters Association whose members account for 75% of...