Canada-U.S. trade: Borderline insanity

How the U.S. obsession with security is crippling our economy.
By Thomas Watson

Consider the predicament of Greg Bavington, CEO of Toronto's National Rubber Technologies, a leading North American supplier of engineered products and materials derived from recycled rubber. The factory he runs is populated with machines so big, he says, they're "anchored to the centre of the earth." He can't exactly move operations closer to his customers in the United States. As a result, the company is stuck in this country, where Bavington spends a lot of time protecting razor-thin margins from U.S. border-security measures. "The people we use to cross the border are sophisticated brokers," he says. "But shipping 1,000 kilometres to the border is still significantly cheaper than driving 1,001 km and crossing it. The border costs us money. And for what? To stop guns coming this way and hydroponic drugs going south. That seems ridiculous if you've been to Europe."

Those executives who, like Bavington, dream of a European-style common market for North America, with borderless trade and harmonized standards will, for the foreseeable future, just have to dream on. An indication of just how poor the state of free trade is came in early February. After months of negotiations, Ottawa and Washington belatedly came to terms on the so-called Buy American issue. Prime Minister Stephen Harper announced that he had won an exemption that will enable businesses to bid on contracts stemming from the American Recovery and Reinvestment Act. "We really have established the notion that Canada is fundamentally different," Harper said, "and the relationship between Canada and the United States is fundamentally different." Yet, with most of the US$787 billion in stimulus funds already spent, our late-stage inclusion seemed to show how low a priority the Americans are putting on trade with Canada.

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