Cross-border trade still unpredictable in wake of 9/11

In the wake of the terrorist attacks of September 11, 2001, Canadian companies have changed the way they trade with the United States, and not necessarily for the better.

Since 9/11, the Canadian and U.S. governments have implemented a number of border security policies including programs to fast-track pre-approved cargo, requirements that advance notice of cargo contents be sent to border officials, infrastructural changes, and others.

However, the results of a recent report from the Conference Board of Canada entitled, Is Just-In-Case Replacing Just-In-Time? How Cross-Border Trading Behaviour Has Changed Since 9/11, indicate that Canadian firms have changed the way they trade with the U.S. as a result of the new border security environment.

“These changes represent either efficiency gains that are diluted by border programs not working effectively or, for the most part, outright losses of efficiency. Instead of sending goods just-in-time, some companies are stockpiling inventories on both sides of the border and pre-shipping goods to their destinations.

“Some trucking companies charge more for cross-border routes, and many companies now drop goods on one side of the border to be picked up by another company on the other side,” the report states.

The results of the report were taken from 60 interviews conducted in late 2006 by the Conference Board’s International Trade and Investment Centre and Centre for National Security with Canadian companies and associations that use the border regularly. These included firms from a variety of different sectors and regions of the country including automotive, auto parts, forestry and paper, chemicals, rails and truck carriers, and others. The results of the interviews were then combined with data analysis.

The report highlights a number of concerns with cross-border trading as a result of 9/11. “Particularly worrying is the finding that some of these new behaviours were reversions back to those that existed before the Canada-U.S. free trade agreement. It suggests that Canada’s access to the U.S. market has been eroded.

“This, in turn, could make it less attractive to buy Canadian inputs or locate production in Canada over the longer term. In a highly competitive international environment, and with a high Canadian dollar, even small indirect costs…could tip the balance away from investing in Canada,” the report says.

The report urges that federal and provincial governments should work to ensure minimal and predictable U.S.-Canada border rules. “They need to ensure the Free and Secure Trade (FAST) program delivers the benefits it promises (the FAST program is designed to fast-track cargo that has been pre-qualified as secure). They should review non-security-related border barriers, such as duty collection, and de-emphasize them in order to offset efficiency losses observed in the analysis.

“Further, Canada’s government should assess a range of other strategies-such as pursuing free trade agreements with major trading partners and refining its tax and education policies-to improve Canadian competitiveness and mitigate what appears to be an erosion of Canada’s preferred access to the U.S.”

Obviously, as the report points out, given the fact that one-third of Canada’s exports reflect some import content, the production of products is highly integrated across the Canada-U.S. border, simple and predictable border rules are critical to ensure that Canadian firms have continuing stable access to the U.S. market.

Jerry Cook
Editor, MPP
jcook@clbmedia.ca

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Hurco opens Canadian office

Hurco has announced the formation of a new division-Hurco Canada Ltd.-dedicated to servicing the Canadian market. The new facility shown here is located in Mississauga, ON.

Hurco Companies Inc., Indianapolis, IN has announced the formation of a new division-Hurco Canada Ltd.-dedicated to servicing the Canadian market. Based in Mississauga, ON, Hurco Canada is a full-service operation including sales, service, and training. The facility includes a showroom equipped with Hurco machining centers and turning centers.

According to Jim Kawaguchi, general manager of Hurco in North America, the formation of Hurco Canada will enable Hurco to focus on Canadian customers and educate them about the value of the technology that is central to the integrated Hurco control.

“Our new WinMax control software has numerous productivity features that support lean initiatives. Lean manufacturing is especially critical to our Canadian customers right now because they are facing skilled labor shortages, a strengthening Canadian dollar that cuts into profits from U.S. customers, and continued competition from overseas manufacturing,” says Kawaguchi. For further information contact Hurco Canada Ltd. at (905) 567-2600 or visit www.hurco.ca

Hardinge celebrates opening of Canadian Technical Centre

(Left to right) Douglas Tifft, president, Hardinge of Canada; Paula Ameigh, director of North American sales; James Langa, vice president and general manager North American machine division; and J. Patrick Ervin, chairman of the board/president/CEO all with Hardinge, cut the ribbon and officially open the new Hardinge Canadian Technical Centre in Mississauga, ON. In addition to the ribbon cutting ceremony, the event included a full day of live machine demonstrations at the new facility. The opening of the new Hardinge of Canada facility attracted over 100 visitors. www.hardingecanada.ca

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