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Governments trying to address border inefficiencies that raise business costs, consumer prices

by Ilene Grossman ~ February 2013 ~ Stateline Midwest »
With the North American economy becoming ever more integrated, delays at the U.S.-Canada border have the potential to cost more and more money.
Robert Pastor, director of the Center for North American Studies at American University, told the Midwestern Legislative Conference Midwest-Canada Relations Committee last summer that up to 10 percent of the cost of a product manufactured in North America is due to border and trade inefficiencies at the point that goods cross between Canada and the U.S.
In a recent report for the Canada Institute, trade expert Laura Dawson cites another statistic: Delays at the border add $800 to the price of a car made in North America. The delay is not only due to long lines of traffic.
The integrated nature of the auto supply chain means that components might cross the border seven times, each time subject to inspections and fees, before a car is fully assembled.
Dawson says some companies that rely on supplies from across the border have moved from a just-in-time delivery system to “just-in-case production,” stockpiling inventory and doubling up on orders — a necessary but expensive business move.
Only three states — Michigan, Minnesota and North Dakota — share a land border with Canada, but all 11 states in the Midwest have an economic stake in efficient land-border operations. In October 2012 alone, surface trade (mainly via truck traffic) between the United States and Canada totaled $48 billion, and five of the top 10 U.S. states for trade value are in the Midwest (see table).
Due to inadequate roads and border facilities, trucks now are subject to delays; shipments are also slowed due to the operation and management of the border.
But recent movement at the state, provincial and federal levels of government may soon lead to improvements at the border.
Michigan Gov. Rick Snyder reached an agreement last year with the government of Canada to build a publicly owned international bridge crossing that would relieve traffic congestion on the 83-year-old Ambassador Bridge, the busiest commercial crossing in the United States.
The new span will provide an alternate route in case the Ambassador Bridge needs to be temporarily shut down and, by way of a new access highway, keep traffic off city roads in Windsor, Ontario. (The privately owned Ambassador Bridge was never fully integrated into the highway system, so trucks traveling into the United States must use local roads to access the bridge.)
Meanwhile, through the bilateral Beyond the Border initiative, the U.S. and Canada are in the midst of a multi-year effort focusing on border management. The effort has resulted in a series of reforms and pilot projects designed to streamline the border-crossing process.
Under the five-year Border Infrastructure Investment Plan, for example, work will be done to expand, renovate and build new customs plazas, lanes at border facilities, and roads leading to the facilities.
Also, one of the new pilot projects will allow for pre-inspection of goods coming into the U.S. from Canada, moving inspections away from border facilities and removing a source of potential delays.

 

Ilene Grossman serves as staff liaison to the Midwestern Legislative Conference Midwest-Canada Relations Committee.