www.cme-mec.ca
Transportation Border
Working Group
Mathew Wilson
Vice President, National Policy
November 2011
www.cme-mec.ca
Presentation Overview
•
•
•
•
•
About CME
Businesses for Better Borders – B3
Why border issues matter
What our priorities are
Expectations of BBWG
www.cme-mec.ca
Canadian Manufacturers & Exporters
• 10,000+ members
• Businesses in all sectors of manufacturing and exporting across Canada as well
as supporting services
• 75% of Canada’s industrial output & 90% of exports
• 92% of members are small/mid-sized companies
• Co-Chair of the Great Lakes Manufacturing Coalition
• National office in Ottawa and divisions in every province
• Only Canadian business association with a full-time representative in
Washington, D.C.
• Chair of the Canadian Manufacturing Coalition
• Founder and Co-Chair of Business for Better Borders
www.cme-mec.ca
Businesses for Better Borders
• B3 formed by CME, CVMA, NAM, AAPC in December 2010
• Represents companies that have significant manufacturing operations in
Canada and the US
– Automotive
– Food products
– Mining and metal processing
– Consumer products
– Technology
• Account for roughly 35% of the trade volume across the Canada/U.S. border
and employ hundreds of thousands of Canadians and Americans through their
integrated operations
• Vetted trusted trading partners of governments:
– Customs Trade Partnership Against Terrorism
– Partners in Protection
– Customs Self-Assessment
www.cme-mec.ca
Why Borders Matter
• Canada/US economic relationship is unique globally
– Deeply integrated across international borders
– Companies face barriers and costs that global competitors do not face
• Other jurisdictions have elimination internal market borders or have
vertically integrated supply chains within their market
• Border directly impacts competitiveness of industry
• $500 billion in 2 way trade
– 60% of trade is intra-company or within company supply chain
• Border compliance costs are conservatively estimated at 1% of GDP
– $13 – $16 billion annual cost on business in Canada
– Equals roughly 3% of transaction costs
• Statistics Canada study on impacts of Canada/US border on business
– 51% of Canadian imports from the US are production parts
– 42% of Canadian exports to the US are production parts
– 49% of businesses had experienced late shipments because of border
delays
www.cme-mec.ca
Making Goods Together
$299 Billion
Canadian Exports
($87 B in energy)
$204 Billion
US Exports
($40 B in vehicles)
www.cme-mec.ca
Border Efficiency Matters
• A vehicle built in Canada or the US will cross the border roughly 6 times in
various stages of production on the way to market:
1. The raw aluminum to make a piston shipped from Michigan to Ontario
to be made into a piston casting
2. In Ontario the part is pre-machined and then shipped for additional
machining in Michigan
3. It crosses borders again to enter into Mexico, where the part is finished
4. After machining, the machined piston travels from Mexico to Wisconsin
for marrying to the connecting rod and outfitted with piston rings
before it travels to a Michigan Engine Plant for final assembly
5. The piston (inside the engine) now travels from Michigan to Ontario for
assembly into a vehicle
6. The vehicle crosses the border again to meet its owner in the US
• Every border crossing requires compliance with all regulatory and security
requirements imposed by governments
– These compliance costs are in addition to cost of border delays
www.cme-mec.ca
International Comparison of Border Compliance
Domestic vs. Import
Dodge Grand Caravan
Vehicle
Hyundai Tucson
Windsor, Ontario
Vehicle Assembly Location
South Korea
US and Mexico
Major components assembly
location
South Korea
7 at a time via truck
Export volume
Roughly 4,500 at a time
via ship
27,000
Border crossings to get 4,500
vehicles to market
1
Every border crossing requires compliance with all regulatory and
security requirements imposed by governments
8
www.cme-mec.ca
Current Focus – Thickening of the Border
• Border operations have not kept pace with
modern manufacturing realities
• Key trade infrastructure built in the 1920’s
– Today, just 2 weeks of auto trade between
Canada and the US is as much as total Canadian
international trade for a year in the 1920’s
• Government department/agency requirements
– Roughly 45 different Canada/US agencies have
importation requirements
– An increased demand for more import
documentation at the border
– Data requests are not aligned across government
and can vary by department
– Trusted trader programs not universal between
governments or across departments
– Ineffective electronic reporting processes
• Increased inspection rates
• Decreased traffic volumes, but increased
“dwell” times
Windsor Ontario
Heading towards Ambassador Bridge
9
www.cme-mec.ca
Priorities for Action
• The primary objective of B3 is to reduce the cost of border compliance by
building on existing programs and efforts of government and industry
1. Harmonize and expand trusted trader programs and their benefits
2. Harmonize to the most effective security and release procedures at
the Canada/U.S. border;
3. Align regulations and regulatory reporting processes across
government agencies and departments, including implementing
government wide Single Window reporting;
4. Implement coordinated Canada/U.S. perimeter border security and
processing requirements;
5. Expand and improve the existing trade infrastructure; and
6. Reduce barriers to the movement of business personnel
www.cme-mec.ca
1. Trusted Trader Programs
• PIP/C-TPAT programs are the recognized programs for supply chain
security, improvements should be focussed on:
– Harmonize existing PIP and C-TPAT between the countries with full
benefits to all approved companies in both countries
– Canada must introduce at the border release benefits for PIP/CTAPT
shipments, specifically dedicated primary inspection lanes
– PIP/C-TPAT must be fully recognized across all government agencies
and departments and duplicative government programs should be
eliminated
– Lower rates of inspection compared to industry averages with front of
line inspections
www.cme-mec.ca
1. Trusted Trader Programs
• CSA/PIC and ISA are the recognized trusted trader programs for trade data
reporting and compliance, improvements should be focussed on:
– US implementation of a program aligned with the existing Canadian
CSA program
– Eliminate transactional reporting requirements for all government
departments and agencies with information provided post-release
– Release at the border with three data elements – registered driver,
importer and carrier and use of transponder technology
– Dedicated lanes from Canadian highway to U.S. interstate, including
PILs (where infrastructure and demand permits)
– Non-stop movement of fully qualified and secured shipments across
the border
www.cme-mec.ca
2. Aligning Regulatory Requirements
• Align import and export requirements between government agencies
• Eliminate requirements where there are no identified health and safety or
security concerns
• Eliminate reporting requirements at the border and allow companies to
report post importation wherever possible
• Implementation of a single window reporting process across all other
government departments
www.cme-mec.ca
3. Movement of Business Personnel
• US and Canadian staff travel across the border frequently
– Product launches
– Systems /machinery & equipment installations and emergency repairs
• Introduce a coordinated and simplified border crossing processes for
business travellers between the countries, including:
• Provide plan language detailed requirements to businesses
• Educate all officers on current requirements
• Eliminate visa requirements for Canada/U.S. citizens and permanent
residents traveling for business purposes
www.cme-mec.ca
Streaming Border Flows
• Level 1: Unknown
– Provide full transactional data details in advance of shipment
– Data requirements and reporting timeframes should be harmonized to
the existing U.S. Automated Customs Environment
• Level 2: Security Cleared (C-TPAT/PIP)
– Provided dedicated primary inspection lanes with
– Data requirements and reporting timeframes aligned with US CTPAT/FAST
• Level 3: Security and Compliance Cleared (CTPAT/PIP/CSA)
– Unimpeded access across the border with a rolling stop process that
eliminates transactional data reporting requirements similar to
current Canadian CSA/FAST
– Full data reported summarily post importation
www.cme-mec.ca
Leadership makes the difference
Mathew Wilson
Vice President, National Policy
mathew.wilson@cme-mec.ca
(647) 808-8231