Both Canadian and U.S. manufacturers have weathered numerous structural changes that have threatened their prosperity and ability to provide well-paying jobs to Canadians. Many of these changes - spikes in the price of oil, the recession and increasing global competition - were beyond the control of government and business. But they have had control over what has been one of the biggest challenges to prosperity on both sides of the 49th parallel: regulatory compliance and barriers to international trade, especially at our shared border.
North American manufacturers don't simply trade with each other; they also build things together. Cars, food products, telecommunications equipment, steel and metal products are just some of the "intermestic" goods they manufacture and sell to each other and to markets around the world. In the manufacturing life cycle of a car, for example, in either Ontario or Michigan, production parts can cross the border as many as six times before the finished vehicle reaches a dealer's lot. Each crossing requires a series of regulatory compliance and security checks, which adds time, raises production costs, decreases profits and increases consumer prices.
This is unique to Canada-U.S. trade because global competitors don't face similar hurdles. Goods are typically manufactured within a single jurisdiction where finished products are imported into Canada or the U.S. with a single customs compliance and security process, dramatically reducing costs for production and, ultimately, the price for consumers. The European Union is a prime example.
In the past decade, governments in Canada and the U.S. have rightfully demanded more information from people and commercial shipments crossing the shared border. They have invested heavily in the ability to target and intercept potential threats. Much of this effort has been due to a surge of finished consumer goods from the Pacific Rim - our competition.
At the same time, manufacturers have invested heavily in their compliance and security and partnered with governments to become trusted traders through initiatives such as Partners in Protection, Customs Self Assessment, and Free and Secure Trade. These programs don't give manufactures a free pass at the border; rather, they provide even greater trade and security information to governments so their resources can be focused on lesser known shipments.
Despite this, the transactional compliance hurdles these companies face at the Canada-U.S. border weaken our manufacturing competitiveness, dampen export growth and impede job creation in both countries.
Canada should strengthen our highly integrated cross-border manufacturing industries through more efficient border operations and regulatory collaboration with the U.S. by building on existing trusted trader programs. Specifically, it should harmonize security and release procedures between Canada and the U.S.; co-operate with the U.S. on a perimeter approach to security and product safety; align regulations and regulatory processes; expand trusted trader programs with the goal of eliminating transactional reporting requirements for qualifying companies; and invest in trade infrastructure, with a focus on high-volume trade corridors.
We believe this common-sense approach can be implemented immediately. By building on existing government frameworks, we can enhance security and facilitate trade, and give a significant boost to Canadian competitiveness and jobs.
Jayson Myers is president and CEO of Canadian Manufacturers & Exporters. Mark Nantais is president of the Canadian Vehicle Manufacturers' Association.
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