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Canadians will soon have to pay $5.50 to enter the United States by air or sea. (iStockphoto/iStockphoto)
Canadians will soon have to pay $5.50 to enter the United States by air or sea. (iStockphoto/iStockphoto)

Loss of tax break raises cost of travel, strains U.S. relations Add to ...

Travelling to the United States by air or sea is about to get a bit more expensive, and Canada-U.S. relations have become a bit more strained, after Congress stripped Canada of its exemption from a tax on travellers entering the country.

A $5.50 customs user fee has long applied to anyone entering the United States by airplane or ship, but Canada, Mexico and the Caribbean have been exempt from the air charge since 1997, and have paid a reduced fee when arriving by ship.

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That exemption disappeared last Friday, when the U.S. Congress passed and President Barack Obama signed free-trade agreements with Colombia, Panama and South Korea.

The bill removed the exemption from Canada and the others to help recoup tariff revenues that will be lost as a result of the three trade deals.

“We did it because of the budget,” explained U.S. Ambassador David Jacobson in an interview. Congress and the administration are struggling to bring down the U.S. government’s $1-trillion-plus annual deficit. Though they agree on little over how do it, they agreed on this.

“I wish we were not in the situation where things like this are necessary, but they are,” Mr. Jacobson said.

“We’ve got to pay for the government, somehow, and one of the ways that we’re doing it is through user fees.”

In the House of Commons, Gerald Keddy, parliamentary secretary to the Minister for International Trade, said the Canadian government was “disappointed” by the new levy.

“We would hope that they will recognize the error of their ways and that free and open trade is the way out of this economic depression, not into it,” he said.

This latest irritant, though relatively minor, joins a rash of similar recent incidents that threaten to undermine Beyond the Border, an ambitious set of negotiations launched at the directive of Mr. Obama and Prime Minister Stephen Harper last February. The talks aim to ease impediments to cross-border trade while also improving continental security.

The action plans that resulted from those negotiations were supposed to have been announced in the summer, but their release has been repeatedly delayed.

In the meantime, Mr. Obama has sent Congress a new stimulus bill that once again contains Buy America provisions shutting out Canadian firms from contracts; American west coast ports and politicians want to impose tariffs on containers entering the United States from Canadian west coast ports; and new efforts to chase down Americans avoiding taxes on money held overseas could sideswipe Canadians living in Canada who also have U.S. citizenship.

Nonetheless, Mr. Jacobson maintained that the Canada-U.S. relationship “is perhaps as good as it has ever been,” despite minor irritants. As for the delay in the Beyond the Border rollout, he said, the initiative is sufficiently important, and sufficiently complex that, “if it takes a couple of extra weeks to get it right, that shouldn’t trouble anyone.”

For the opposition, the new tax is another sign that the Harper government is failing to protect Canadians’ interests in relations with the United States.

“It’s just another added tax, another added cost that Canadians are facing as a result of this government not standing up and making sure that Canadian interests are being represented,” NDP international trade critic Robert Chisholm said.

The new tax, which takes effect on Nov. 5 according to the embassy, is particularly galling for Snowbirds who winter in the United States. The U.S. government, instead of welcoming their contribution to the economy, seems determined to make it more expensive for them to get there, said Michael Mackenzie, executive director of the Canadian Snowbirds Association.

It’s not so much the money, he said in an interview, “it’s the attitude.”

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