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www.cme-mec.ca Transportation Border Working Group Mathew Wilson Vice President, National Policy November 2011
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www.cme-mec.ca Presentation Overview About CME Businesses for Better Borders – B 3 Why border issues matter What our priorities are Expectations of BBWG
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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
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www.cme-mec.ca Businesses for Better Borders B 3 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
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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
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www.cme-mec.ca Making Goods Together $299 Billion Canadian Exports ($87 B in energy) $204 Billion US Exports ($40 B in vehicles)
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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
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www.cme-mec.ca International Comparison of Border Compliance 8 Dodge Grand CaravanVehicleHyundai Tucson Windsor, OntarioVehicle Assembly LocationSouth Korea US and MexicoMajor components assembly location South Korea 7 at a time via truckExport volumeRoughly 4,500 at a time via ship 27,000Border crossings to get 4,500 vehicles to market 1 Domestic vs. Import Every border crossing requires compliance with all regulatory and security requirements imposed by governments
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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 9 Windsor Ontario Heading towards Ambassador Bridge
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www.cme-mec.ca Priorities for Action The primary objective of B 3 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
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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
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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
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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
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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
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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 C- TPAT/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
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www.cme-mec.ca Leadership makes the difference Mathew Wilson Vice President, National Policy mathew.wilson@cme-mec.ca (647) 808-8231
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