The U.S.-Canada trading relationship is the world’s largest: US$759 billion in bi-lateral trade in 2014, with an additional US$650 billion in foreign direct investment flowing across the border in either direction. It’s a fact U.S. Ambassador to Canada Bruce Heyman likes to remind people of.
The former Goldman Sachs investment banker has been our southern neighbour’s official representative in Ottawa for just over a year—a post he says he took because of his business background. Heyman believes there’s still room to grow bilateral trade, though he acknowledged in a meeting last month with Canadian Business editors that there’s “no magic wand” to boost the economic relationship between the two countries.
“I’m looking for ways to just grow businesses, and be a bit more agnostic about which side of the border this is happening on,” he said. That might seem a little puzzling—Heyman is after all a representative of the U.S. government. But he says the closely intertwined nature of the two countries’ economies and supply chains mean there’s no room for pariochalism. “I believe that the better the economy is in Canada it accrues to the U.S. interest and the better the economy is in the U.S. it accrues to Canada’s interests,” he said.
Here are some areas where the two governments have been working to improve conditions for businesses trading across the border.
Fewer idle trucks
Holdups caused by cargo inspections at the 120 crossing sites along the border can be extremely frustrating for exporters. “The worst things is to be the truck behind the truck that gets stopped,” Heyman acknowledged. “You’re sitting there at the border waiting while somebody’s inspecting either your truck or another truck, and then time’s whiling away while you’re not moving your merchandise.”
A pilot program aims to speed up the inspection process by creating pre-inspection sites away from the border itself where cargo can be examined, preventing a bottleneck. “You bring the trucks in, you pre-inspect the truck there,” said Heyman, explaining the concept. “You seal it, and it runs through the border smoothly.”
It’s still just an experiment at the moment cautioned Heyman, but “the early signs are that it’s working quite well and the truck drivers really like it.”
Expedited business travel
Some 300,000400,000 people move across the border each day, but 50% of the border crossing points handle 95% of that traffic. That can make for some very long lines.
The U.S. and Canadian governments have recently signed a pre-clearance agreement in an attempt to speed up the process. While the agreement is currently limited to eight Canadian airports, Heyman said he hopes to see it extended to road, rail and marine crossings as well.
Another pilot project, on trains run by Rocky Mountaineer, allows Canadian and U.S. customs agents to screen travellers on the other country’s soil. “We’re able to do the whole interview and pre-clearance with portable devices,” Heyman explained. “Get on the train, go through—just like you used to collect the tickets, but now you’ve got these devices that actually can clear people into the United States.”
Heyman also pointed to the NEXUS travel program as something he’d like to see expanded. Card holders have access to expedited customs and immigration processing at designated border crossings, a useful feature for frequent travellers who can breeze past long lines. British Columbians appear to have adopted NEXUS much more readily than their eastern compatriots. “We have more actual people using the NEXUS card in Vancouver than are using it—with more than two times the number of people going to the U.S.—in Toronto,” he reported. Some 33% of travellers from B.C. entering the U.S. use the service; the corresponding number for Ontarians is in the mid-to-low teens.
Removing regulatory hurdles
Different regulators means different regulations, and it’s often impossible to meet both U.S. and Canadian requirements with the same product. The two governments are making an active effort to resolve or at least reduce some of these inconsistencies according to Heyman. “We’ve tried to sit down with industry groups to try to understand what these individual items are,” he said. “[Then] you’ve got to roll up your sleeves and start working regulator to regulator and try to fix this.”
Heyman said companies need to make their regulatory hurdles known, because governments often aren’t aware of the discrepancies. Bringing such problems to the attention of the authorities has delivered results in the past. “The auto industry had some kind of very low percentage harmonization that was going on of regulation,” he remembered. “Now because of the supply chain and the way we make things together, it’s something approaching 8090% in-sync regulation that’s taking place.”
Regulatory problems are firmly on Heyman’s radar, he said. “I’ve made it known within the embassy that we take this very seriously and we want to put the muscle of the U.S. government behind finding ways to fix this,” he said.
Canada is the top export market for two-thirds of U.S. states. To remind them of the importance of that trading relationship and highlight opportunities, Heyman sent a letter to each of the 50 governors. “It wasn’t a form letter,” he said. “The letter actually talked about their state and how much business their state does with Canada, and why they should come up on a trade mission to Canada.”
The letter-writing campaign is showing results. Ketucky’s Steve Beshear lead a trade mission to Canada late last month, and Heyman said other governors are planning to visit in the summer. “If they’re proposing that the governor go do a trade mission, or reach outside of the United States, I wanted them to have front-of-mind Canada as their first option,” he said.
Across the ocean
Canada and the U.S. are both party to two very important trade agreements: the existing NAFTA treaty, and the in-negotiations Trans-Pacific Partnership (TPP). TPP would cover 12 countries with 40% of global GDP and a third of the world’s trade.
Heyman said the deal opens up plenty of opportunities for North American companies. “I know a large portion of the country is also looking for trading opportunities in the Far East—Japan, Australia, New Zealand, Australia,” he said. “We have these very large ports all along our shared Pacific coastline and this is an important part of [increasing traffic].”
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