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					Finding the Balance:
  Reducing Border Costs While Strengthening Security




                                           February 2008
              Partnering Organizations

Co-Chairs:      Canadian Chamber of Commerce
                U.S. Chamber of Commerce


Air Transport Association of Canada
American Trucking Associations (ATA)
Association of International Automobile Manufacturers of Canada
Binational Tourism Alliance
Border Trade Alliance
Buffalo Niagara Partnership
Business for Economic Security, Tourism and Trade (BESTT)
Canadian Airports Council
Canadian American Business Council
Canadian Chemical Producers’ Association
Canadian Council of Chief Executives
Canadian Courier and Logistics Association
Canadian Die Casters Association
Canadian Federation of Independent Business
Canadian Industrial Transportation Association
Canadian International Freight Forwarders Association
Canadian Manufacturers and Exporters
Canadian Plastics Industry Association
Canadian Society of Customs Brokers
Canadian Trucking Alliance
Canadian Vehicle Manufacturers’ Association
Canadian Vintners Association
Canadian/American Border Trade Alliance
Chamber of Marine Commerce
Council of the Americas
Food Processors of Canada
Grocery Manufacturers Association (GMA)
Hotel Association of Canada
I.E. Canada, Canadian Association of Importers and Exporters
International Association of Exhibitions and Events (IAEE)
Motor & Equipment Manufacturers Association
National Business Travel Association (NBTA)
National Business Travel Association Canada
National Foreign Trade Council
Public Border Operators Association
Québec-New York Corridor Coalition
Railway Association of Canada
Retail Council of Canada
Retail Industry Leaders Association
Shipping Federation of Canada
Supply Chain and Logistics Association Canada
The Capital Corridor
Tourism Industry Association of Canada
               Executive Summary

Canada and the United States enjoy a special      tion in programs that identify known low-risk
relationship that has been built on shared val-   goods/travelers, allowing border officials to
ues developed through the long history of         expend their limited resources where they are
family, friends, and visitors who live on both    most needed – on unknown shippers and
sides of the border. It facilitates the largest   travelers.
bilateral trading relationship in the world,
with approximately $1.5 billion USD1 in two-      We call on both our governments to imple-
way trade crossing the border on a daily          ment the recommendations which will
basis. The benefits flowing from this relation-   increase Canadian and U.S. competitiveness
ship are significant, including approximately     and reduce the unpredictability related to the
7.1 million jobs in the United States2 and        border. Our current economic climate only
3 million jobs in Canada3 .                       amplifies the urgent need for action; action
                                                  that will deliver a big win for Canadian and
Unfortunately, both Canadian and U.S. busi-       U.S. jobs, companies, and a more secure
ness communities are expressing a serious         North America.
and growing concern with the increasing
costs and delays associated with crossing the     The active participation by our leaders in the
border. While we strongly support the efforts     Security and Prosperity Partnership of North
of our governments to protect our two             America (SPP) initiative clearly demonstrates
nations against those who threaten our free-      that both prosperity and security are impor-
doms, we also believe that we can keep our        tant to our governments. The SPP workplan
borders closed to terrorism yet open to trade.    set a framework for further trilateral action
Ensuring the safety and prosperity of our citi-   on border measures and direct business input
zens requires us to work together so that         was provided by the North American
decisions about security and economic policy      Competitiveness Council (NACC). The North
are mutually reinforcing and balanced and do      American Leaders’ Summit in Montebello,
not serve to unnecessarily disrupt legitimate     Quebec in August 2007 called for “further
travel and trade. A ‘thick’ border, one associ-   cooperation in law enforcement, screening,
ated with increasing border-crossing fees,        and facilitation of legitimate trade and travel-
inspections, and wait times, is an expensive      ers across our borders.”
border. A sense of frustration exists within
the Canadian and U.S. business communities        This report responds to this call for action
that many practical measures that could           with specific and practical solutions for the
reduce border-related costs have yet to be        Canada-U.S. border. We have collected indus-
taken.                                            try’s top recommendations for cost reduc-
                                                  tions, many of which have been expressed in
To address some of these concerns, the            other documents.
Canadian Chamber of Commerce and the
U.S. Chamber of Commerce co-chaired a             Many of the recommendations will strength-
coalition, in close collaboration with members    en participation in trusted shipper and travel-
and partnering associations, to collect specif-   er programs that have been designed by our
ic, near-term and practical recommendations       governments to enhance their ability to take
on how to reduce Canada-U.S. border-related       a risk-based approach to securing our bor-
costs.                                            ders. The more participants in these pro-
                                                  grams, the more border officials can focus on
This report recognizes and fully embraces         identifying illegitimate cargo and travelers –
post 9/11 security realities. Many of the rec-    the aim of all the security measures. We sup-
ommendations seek to increase the participa-      port these programs. Businesses and travelers,

                                                                                                     i
     from both sides of the border, are willing to                             It is important to state that we recognize that
     undertake the often costly investments need-                              a significant contributor to the level of unac-
     ed to participate in these voluntary, certified                           ceptable burden that has been placed on the
     low-risk programs if they benefit from more                               movement of legitimate goods, services, and
     predictable and expedited border crossings.                               travelers, has been insufficient funding for
     Businesses have identified a number of need-                              the border agencies. We clearly state our sup-
     ed changes that will enhance the participa-                               port for the needed funding for the agencies
     tion in these programs including: establishing                            and departments that must implement the
     goals, with shared metrics, for measuring the                             recommended measures.
     success factors that will increase participation;
     ensuring all government departments and                                   The focus of this paper is reducing border-
     agencies with border requirements are fully                               related costs in the short term. While not
     implementing the Single Window Initiative or                              addressed in this report, we do recognize that
     International Trade Data System requirements;                             there is also a pressing need for governments
     mutual recognition between U.S. Customs-                                  and industry to come together to rethink how
     Trade Partnership Against Terrorism (C-TPAT)                              we achieve our joint needs for a secure and
     and Canada’s Partners in Protection (PIP)                                 trade efficient border in the mid to long-term.
     trusted shipper programs; elimination of                                  There are also important issues that fall out-
     duplicative fees and requirements; establish-                             side of the mandate of this paper that must
     ing a pilot program for expediting shipments                              be addressed including the urgent need to
     from low-risk food producers; and extensive                               fund and put in place upgraded border infra-
     marketing, expansion and wide implementa-                                 structure, expanding preclearance, and imple-
     tion of the secure NEXUS and People Access                                menting a coordinated clearance and point of
     Security Service (PASS) programs.                                         departure determination program. While not
                                                                               short term deliverables, it is important that
     Other measures that will reduce the costs and                             efforts begin in the near term.
     risks associated with the border are also
     needed. These include providing 24/7 border                               The growing global competition and current
     access, including all secondary inspections, by                           financial downturn make the adoption of
     fully trained officers at major crossings; fur-                           these recommendations essential to ensuring
     ther progress on the development of a border                              the competitiveness of Canada and the
     contingency plan; rapid implementation of                                 United States. We call on the governments of
     enhanced drivers’ licenses; waiving of APHIS                              Canada and the United States to commit to
     fees; establishing a pilot preclearance pro-                              fully deliver on these recommendations within
     gram for low-risk food importers; rescinding                              the next 18 months.
     the requirement for individual food health
     stickers; a Secure Flight Program exemption                               The full list of recommendations can be
     for Canadian overflights; a harmonized elec-                              found in 3 List of Recommendations.
     tronic in-transit process; establishment of a
     Short Sea Shipping pilot project; full rollout of
     Radio Frequency Identification (RFID) technol-
     ogy at all major crossings; and a work around
     ensuring minimal disruptions during the
     Peace Arch border upgrade.


     1U.S. Department of State. 2008. “Background Note: Canada”.
     2Canadian Embassy to the United States. 2006. “State Trade Fact Sheets 2006”.
     3David L. Emerson, Minister of International Trade Canada. October 5, 2007. “Free Trade Works.” The Chronicle Herald.

ii   Finding the Balance: Reducing Border Costs While Strengtheing Security
         Table of Contents


    EXECUTIVE SUMMARY                                                i

1   THE CURRENT SITUATION                                            1
    Impact of Border Delays                                          1
          Increased Border Wait Times                                1
          Direct Fees Applied to Cross-Border Commerce               2
          Cross-Border Programs and Increased Inspection Rates       3
          Current Initiatives Addressing Border Cost Concerns        4
    Moving Forward                                                   5

2   PRIORITY NEAR-TERM AND ACHIEVABLE RECOMMENDATIONS                7
    Movement of Cargo                                                7
          Trusted Shipper Programs                                   7
          APHIS Recommendations                                      9
          Food and Agriculture Exports: Low-Risk Food Importer
          and Preclearance                                           10
          Application of Health Certificate Stickers on
          Individual Case Shipments                                  11
          Other Government Departments: Single Window
          Initiative                                                 12
          Support for Inland Clearance                               13
          Harmonized Electronic In-Transit Process                   13
          Short Sea Shipping Pilot Program in the Great Lakes Area   13
    Trusted Travelers and Legitimate Business/Personal Travel        14
          NEXUS                                                      14
          Cross-Border Business Travel Facilitation                  15
          Enhanced Drivers’ Licenses                                 17
          People Access Security Service (PASS) Cards                18
          Secure Vicinity RFID Technology                            19
          Secure Flight/APIS Quick Query (AQQ) Notice of
          Proposed Rule Making (NPRM)                                19
    Additional Measures                                              20
          Increasing Staffing, Training, and Hours of Services
          at Border Crossings                                        20
          A Workaround for the Peace Arch Border Crossing            21
          A Border Contingency Plan: Deliver on Montebello
          Commitments                                                22

3   LIST OF RECOMMENDATIONS                                          25
      1             The Current Situation

Impact of Border Delays

Feedback from Canadian and U.S. business          delays can be found all along our shared bor-
shows an increase in border costs and a           der.
‘thickening’ of the border because of
increased wait times; direct fees for crossing    The cause of these inordinate delays has been
the border; additional and duplicative border     attributed to a number of factors, including:
programs; additional costs for participating in
trusted shipper and traveler programs; and        •       Inadequate border infrastructure
increased inspection times. The extensive lay-            relative to traffic volumes;
ering of these costs has resulted in a border     •       Limited primary inspection lanes
that is becoming increasingly more expensive              being operational during peak hours
to cross for both cargo and travelers.                    because of inadequate staffing of
                                                          Canada Border Service Agency
Increased Border Wait Times                               (CBSA) and U.S. Customs and Border
                                                          Protection (CBP);
The summer of 2007 saw the longest delays         •       Increased processing times for pas-
since 2001 for U.S.-bound traffic at many                 senger vehicles;
land-border crossings. Delays of up to three      •       Inspections of increased frequency
hours were not uncommon even at some                      and duration for all cargo and travel-
border crossings not known for extensive wait             ers—including those deemed to be
times. Yet during 2007, at Ontario–U.S. land              low-risk;
crossings, the volume of commercial and pas-      •       Lack of clarity on admissibility
senger vehicles was down almost 4 percent.                requirements;
For example, in August 20074, the Peace           •       Technological issues with CBP
Bridge crossing experienced an increase in                computers, particularly with the
average inspection time per vehicle from 56               recent introduction of the Automated
seconds to 74 seconds, a 32 percent increase              Commercial Environment (ACE)
from the same period in the previous year.                program; and
With an average of 14,500 vehicle crossings       •       Exacerbation of the above challenges
per day, 18 short seconds per vehicle easily              by currency fluctuations that
turns into hours of delay at each crossing.               increased cross-border shopping.
Average wait times at the Detroit-Windsor
Tunnel increased from 13.4 minutes in May         Increased border wait times have resulted in
2007 to 23.6 minutes in August 2007. Finally,     just-in-time deliveries being unable to meet
at the Blue Water Bridge, delays of at least      their crucial deadlines, leading to both inter-
one hour were experienced on 38 days              rupted delivery of goods and a cascading
between July 2007 and August 2007 . The           effect that disrupts the complex Canada-U.S.
problem was so severe last summer that the        supply chain. More disturbing from a long-
Ontario Ministry of Transportation installed      term competitiveness perspective is that com-
portable toilets along Highway 402 for travel-    panies have to revert to warehousing invento-
ers. Similar examples of increased border         ry systems to ensure timely deliveries across



4 Public Border Operators Association. 2007.

                                                                     Section 1: The Current Situation   1
    the border. These costly and inefficient                           Direct Fees Applied to Cross-
    processes have a heavy impact on investment,                       Border Commerce
    jobs, and productivity within North America.
    The business community recognizes its role as                      Another factor leading to increased costs is
    a key partner in ensuring a secure North                           the layering of additional direct border-cross-
    America. Our companies have made signifi-                          ing fees. For example, the U.S. Animal and
    cant investments to strengthen the security of                     Plant Health Inspection Service (APHIS) fee is
    their supply chains and to ensure the integrity                    applied to cover the cost of inspection for
    of their employees. While certain aspects                          imported fruits and vegetables into the
    have been successful, this partnership is at                       United States. All commercial conveyances
    risk and trusted shipper and traveler pro-                         and airline passengers must pay the fee, irre-
    grams are being undermined. Companies par-                         spective of the cargo being carried. There is a
    ticipating in trusted shipper and traveler pro-                    real concern that more fees may be intro-
    grams have not fully realized stated program                       duced in both countries. Canada is currently
    benefits. For example, people certified for                        reviewing its user fee system under its Core
    expedited processing under these programs                          Services Review program and concern exists
    have been unable to quickly access dedicated                       that this may lead to increased fees for busi-
    lanes because they are blocked by long lines                       ness for a variety of CBSA programs and serv-
    of passenger traffic at border approaches.                         ices. Furthermore, proposed legislation cur-
    These lineups also cause extensive delays for                      rently under consideration in the U.S.
    commercial trucks that are not eligible for                        Congress would restrict all agriculture imports
    trusted shipper programs.                                          to only a limited number of locations with
                                                                       laboratories operated by the Food and Drug
    The negative impacts extend beyond intra-                          Administration (FDA), significantly driving up
    North American supply chains: cross-border                         costs for many businesses. Perhaps most frus-
    healthcare workers have been subjected to                          trating is that the new and prospective border
    lengthy waits; smog levels in border commu-                        fees may also apply to businesses that our
    nities have increased significantly because of                     respective governments have certified as
    the thousands of vehicles idling for hours in                      trusted shippers, or otherwise present a low
    hot and humid conditions; and the health of                        risk.
    livestock have been endangered during long
    wait times in hot weather.

    The increased border-processing times have
    also had a significant impact on many small
    businesses and communities on both sides of
    the border. Tourism, hospitality, shopping,
    and cultural activities have been seriously
    affected because casual border traffic in both
    directions is deterred by long border wait
    times, the vagaries of customs procedures,
    and sheer uncertainty of how long the
    process will take.



2   Finding the Balance: Reducing Border Costs While Strengtheing Security
Cross-Border Programs and
Increased Inspection Rates

Businesses from all links of the supply chain     Clearly these costs are reaching the breaking
are joining trusted shipper and traveler pro-     point and risk becoming an unmanageable
grams such as Free and Secure Trade (FAST),       burden on Canadian and U.S. job producers.
Customs-Trade Partnership Against Terrorism       It is in neither government nor industry’s
(C-TPAT), Partners in Protection (PIP), Customs   interests to create or maintain a business
Self Assessment (CSA), and NEXUS. While           environment that encourages the work and
applying for and maintaining certification in     jobs to move offshore.
these programs is costly, businesses view the
cost and effort as worthwhile to gain pre-
dictable, expedited border crossings.
Certification in these programs can cost a
company well in excess of $100,000 USD.
The overall benefits are now being ques-
tioned as participating companies are contin-
uously subjected to secondary inspections at
the border. One major North American com-
pany reported that inspection rates for low-
risk shipments entering Canada increased
approximately 30 percent in 2007 from the
previous year, despite the fact that the com-
pany is a longstanding participant in trusted
shipper programs. Companies tell us ship-
ments entering the United States are also fac-
ing increased inspection rates.

Canadian and U.S. businesses are very con-
cerned about the associated costs of comply-
ing with new and expanded border security
programs, often with duplicative require-
ments. These programs are layered on top of
each other adding to the complexity and cost
of moving goods and people across our bor-
ders. One company reported an annual
expense of $1 million USD because of the
inspections and delays from increased security
measures, coupled with participation in trust-
ed shipper programs.




                                                                     Section 1: The Current Situation   3
    Current Initiatives Addressing
    Border Cost Concerns

    We see encouraging signs in a number of                           to help passengers quickly navigate border
    government initiatives that show progress can                     procedures by automating the processing that
    be made. Recent U.S. legislation has delayed                      takes place at primary inspection lines. It will
    implementation of the Western Hemisphere                          allow CBSA to target more resources to
    Travel Initiative (WHTI) at land and sea ports                    unknown and potentially high-risk passengers
    of entry until June 2009. Now governments                         and goods. Harnessing new technology pro-
    on both sides of the border must tackle the                       vides a more practical and cost-effective solu-
    significant tasks of ensuring that a critical                     tion to eliminate congestion in airport arrival
    mass of acceptable documentation is in circu-                     areas.
    lation and Radio Frequency Identification
    (RFID) technology is implemented at all major                     These measures are positive steps in the right
    border crossings before June 2009 to enable                       direction. Unfortunately, these steps alone are
    a smooth introduction of the new processes.                       not enough. Both the Canadian and U.S.
    Beyond passports, expanding participation in                      governments should continually reexamine
    trusted traveler programs, such as NEXUS and                      the benefits, costs, redundancies, and com-
    FAST, and implementing enhanced drivers’                          plexity of border measures, ensure any new
    licenses will provide an advanced level of                        initiatives are properly funded, and initiate a
    security to tackle the challenge of ensuring                      clear plan to undertake the recommendations
    that security needs do not impede the move-                       from this report for the collective good. The
    ment of people, goods, and services across                        recommendations from this report will aid
    our border. We remain committed to working                        policymakers in facilitating cross-border busi-
    with government on the promotion of these                         ness, while at the same time ensuring the
    programs. We need to recognize that border                        security of North America.
    travelers must see demonstrable benefits
    from these expedited programs or they will
    not use them. At times, it is not clear that
    these programs are delivering the benefits
    promised.

    Other positive developments include a bill
    passed and signed into U.S. law at the begin-
    ning of 2008 which authorizes a study of the
    impact of border wait times at high-volume
    U.S. land-border crossings.

    The expansion of the NEXUS program and
    the start of the Electronic Primary Inspection
    Line (E-PIL) pilot project are also good news.
    E-PIL, set to commence in June 2008 at
    Vancouver International Airport, is designed



4   Finding the Balance: Reducing Border Costs While Strengtheing Security
Moving Forward

Security and prosperity in North America are      mutual economic growth is dependent on
mutually dependent and complementary. Our         how quickly – and securely – we can expedite
respective governments should address the         products, people, and ideas. Effective border
twin goals of security and the facilitation of    management has become a key economic
legitimate trade and travel. We support the       driver for both countries.
development of a comprehensive, layered,
and risk-based strategy to manage our shared      It is important to note that this report does
border. This approach offers the greatest         not address the real need for both govern-
degree of security and optimal use of facility,   ments and industry to develop a long-term
personnel, and financial resources without        border strategy that addresses North
impeding legitimate travel and trade.             American security and competitiveness chal-
                                                  lenge in the 21st century, especially the
We need to keep in mind the degree of             importance of keeping North America com-
Canadian and U.S. social and economic inte-       petitive in the face of economic challenges
gration. Canadians and Americans do not just      from other parts of the globe. A long-term
sell things to each other. More importantly       strategy should include the urgent need for
we make things and we do things together –        continued investment in building and mod-
activities which provide benefits on both sides   ernizing border infrastructure including
of the border. For example component parts        expanding capacity at the Detroit-Windsor
of a vehicle produced in North America may        border crossing—the busiest land crossing in
cross the border approximately seven times        the world; expanding preclearance capacity,
during the production cycle. Because of fees,     including at marine crossings; lengthening
unpredictable wait times, and security compli-    dedicated lanes for trusted shippers and trav-
ance costs associated with each border cross-     elers; and a coordinated clearance and point
ing, products manufactured within North           of departure determination program that
America may face a competitive disadvantage       works to ensure only low-risk goods and peo-
compared to their foreign competitors whose       ple arrive on Canadian and U.S. soil. A long-
finished products cross the border only once.     term strategy is needed for economic security,
For vehicle manufacturers, this can add sever-    benefiting Canada and the United States.
al hundred dollars5 to the cost of manufactur-
ing a vehicle domestically that imported vehi-    However, border-dependant businesses can-
cles do not incur. For Canadian and U.S. com-     not wait for these long-term solutions. We
panies dependent upon intra-North American        must act now to reduce border costs. Given
supply chains, these additional costs and reg-    the litany of challenges and even longer list
ulatory burdens have a direct impact on a         of areas where action is being sought, this
company’s bottom line—and on the jobs that        report attempts to lay out what Canadian
depend on that company’s success.                 and U.S. businesses see as among the most
                                                  critical priorities for what must be accom-
With billions of dollars worth of goods and       plished within the next 18 months.
services and several hundred thousand people
moving across the border every day, our

5Canadian Vehicle Manufacturers’ Association.

                                                                     Section 1: The Current Situation   5
6   Finding the Balance: Reducing Border Costs While Strengtheing Security
     2         Priority Near-Term and
               Achievable Recommendations

Movement of Cargo

Trusted Shipper Programs

We strongly support voluntary trusted shipper            several hundred dollars per occurrence, and
programs such as Canada’s Partnership in                 delay the truck, the driver, and all the ship-
Protection (PIP), the U.S. Customs Trade                 ments on board for hours. Similar costs and
Partnership Against Terrorism (C-TPAT), and              incidents occur on products entering the
the Free and Secure Trade (FAST) Program,                United States. For example, another company
which serve to enhance supply chain security             reported that during the melamine testing of
without imposing one-size-fits-all regulatory            May 2007, multiple loads of their product
burdens on businesses. These programs allow              were detained and tested at the border
border agencies to redirect their limited                despite being C-TPAT and PIP approved, using
resources to the inspection of unknown                   FAST-certified drivers and FDA registered
cargo—in essence making the search for the               manufacturing plants. In addition, this com-
proverbial needle to be in a smaller haystack.           pany reported that low-risk certified products
                                                         were held up in excess of three weeks.
Unfortunately, participation in these programs           Increased inspection rates add to the cycle
is providing few benefits. Of concern are the            time for customs clearance, negatively
increasing rate of inspections and the imposi-           impacting just-in-time delivery. This is contrary
tion of additional border fees that are being            to the benefits anticipated by industry who
put in place without consideration to the                participate in these programs.
level of risk of the shipments or the compli-
ance level of the importer. Participants face            Canadian and U.S. ports are also important
similar increases in fees, border delays, and            North American hubs of entry for cargo, with
compliance burdens as those outside the pro-             cargo entering U.S. ports destined for Canada
gram. The benefits of participation may not              and vice-versa. It is important that security
outweigh the costs.                                      measures be recognized from port to port.
                                                         For example, no duplication of effort should
A number of companies reported that com-                 be required for inspected, secured, and in-
pliance with trusted shipper programs costs              transit containers moving through Canada to
approximately $100,000 USD and may take                  the United States. Today, 100 percent of con-
up to two years to be granted certification. In          tainerized cargo entering via Canadian ports
return for participation, inspection rates on            and destined for the United States is subject
one major North American company’s low-                  to cargo and vehicle screening using non-
risk shipments entering Canada increased                 intrusive inspection (NII), scanning and may
approximately 30 percent in 2007 despite                 be subject to additional inspections. NII sys-
approval and acceptance into the Canadian                tems have been installed at nine rail border
Customs Self-Assessment (CSA) program in                 points, scanning virtually 100 percent of rail
2006 and participation as a long standing                traffic entering the United States from
member in the C-TPAT and PIP programs. In                Canada. The system can penetrate tankers,
addition, the cost of offloading shipments for           grain cars, and boxcars using a low-level
inspections at the border can cost carriers              gamma ray radiation source, generating a




                                                  Section 2: Priority Near-Term and Achievable Recommendations   7
    radiographic image for each car. All Class 1                       to specific vehicles as needed. Additionally,
    railways are also C-TPAT-certified, providing                      carriers using this option should be allowed
    another level of enhanced security. As such,                       to enter transponder and corresponding vehi-
    there is little need for duplicative inspections                   cle information for each load into the ACE
    of intermodal containers, at rail border                           portal.
    points, that have been cleared at the
    Canadian port of entry.                                            Another example of duplicative costs can be
                                                                       seen through the October 2007 introduction
    In addition to duplicative border inspections,                     by the Department of Homeland Security
    we also see duplicative costs. Currently, carri-                   (DHS) of the TWIC-certification in the United
    ers that want to take advantage of FAST into                       States. TWIC has created a situation where
    the United States and CSA-FAST into Canada                         drivers who have been security screened for
    are required to belong to both the C-TPAT                          FAST must still pay a fee of $105 USD to
    and PIP programs. We are pleased to see that                       obtain a TWIC card. Currently, the focus is on
    CBSA has begun the process of strengthening                        port workers and other workers, such as
    the PIP program and has engaged the United                         truck drivers, who require access to port
    States in dialogue about mutual recognition.                       property. It is expected that the card will
    However, we are concerned that CBSA may                            eventually be required for access to other
    end up with a more rigorous PIP program                            transportation facilities (airports and rail
    that still requires carriers to belong to C-TPAT.                  yards).
    The goal must be to achieve nothing short of
    mutual recognition, i.e. Canada and the
    United States accepting the equivalency of
    each other’s supply chain security programs
    (not harmonization). Therefore, companies
    interested in trusted shipper programs will
    only need to apply to one program with certi-
    fication being recognized by both Canada
    and the United States. A similar case can be
    made for the U.S. Transportation Worker
    Identity Credential (TWIC) and Canada’s
    Seafarers’ Identity Document (SID).

    Additionally, FAST requires a specific
    transponder to be assigned to a specific
    Vehicle Identification Number (VIN). This
    poses unique challenges for carriers without a
    dedicated cross-border fleet. The inability of a
    carrier to transfer its transponders to multiple
    vehicles results in increased operating expens-
    es, late deliveries, and the potential loss of
    revenue. We recommend allowing carriers to
    have a pool of transponders and assign them




8   Finding the Balance: Reducing Border Costs While Strengtheing Security
Recommendations                                    APHIS Recommendations
•   The Canadian and U.S. governments
                                                   In 2006, the U.S. Department of Agriculture’s
    should establish goals and develop
                                                   (USDA) Animal and Plant Health Inspection
    metrics to drive agency behavior and
    priorities that demonstrate tangible           Service (APHIS) published an Interim Final
    benefits to program participants in            Rule that removed a long-standing exemption
    trusted shipper programs within the            from animal quarantine and inspection (AQI)
    next six months.                               and fees for conveyances originating in
                                                   Canada. Despite objections from Canadian
•   The Canadian and U.S. governments              and U.S. carriers, manufacturers, and ship-
    must implement a strategy to agree             pers, the USDA fully implemented the rule in
    on requirements and establish                  2007. Under the rule, APHIS fees and AQI
    reciprocity for all complementary              apply equally to all shipments, irrespective of
    freight security programs (including           cargo type or associated risks. This has signifi-
    trusted shipper and credentialing              cantly increased the costs of Canada-U.S.
    programs). This strategy must also             trade and cross border manufacturing.
    improve efficiency for both govern-
    ment and industry by reducing dupli-           While the enhanced inspections generated by
    cate fees and redundant implementa-            the fees only covers fruits and vegetables, all
    tion costs.                                    commercial conveyances and airline passen-
                                                   gers must pay the fee, irrespective of the
•   As committed in the SPP, Canada and            cargo being carried. The APHIS fee is $5.25
    the United States entering into an             USD per entry or $105 USD annually with a
    agreement to mutually recognize                purchased transponder for commercial trucks;
    companies participating in the                 $490 USD per entry for commercial vessels
    Canadian PIP program and the U.S.              carrying 100 net tons or more; $7.75 USD
    C-TPAT program no later than June              per rail-car entry for railway service providers;
    2008;                                          $70.50 USD per arrival per commercial air-
                                                   craft; and $5 USD per arrival for international
•   Canada and the United States
                                                   airline passengers with a total cost of approxi-
    ensuring that rail and truck cargo
    inspected, cleared, and secured at a           mately $78 million USD plus industrial pro-
    Canadian port is not subject to                cessing costs. Furthermore, CBP border offi-
    further inspections at the U.S.                cials must collect the fee payment and distrib-
    border;                                        ute change, leading to further border delays.

•   Canada and the United States allow             The rule does not follow the targeted risk
    ing carriers without dedicated cross-          management model that has been driving
    border fleets to have a pool of FAST           customs reforms in North America. For
    transponders and assign them to                instance, Canadian Class 1 railways and truck
    vehicles as needed; and                        carriers have invested heavily in partnering
                                                   with CBP programs such as C-TPAT and FAST
•   DHS should develop a process for               to secure the supply chain. As such, there is
    automatically enrolling FAST-certified         no demonstrated need for additional inspec-
    drivers into the TWIC program with             tion under the APHIS proposal.
    ut requiring the driver to undergo
    additional screening, fees, or
    application process.
                                             Section 2: Priority Near-Term and Achievable Recommendations   9
     Nor is there an exemption for the conveyance                       Canada are subject to secondary inspections.
     that pose little or no threat of importing plant                   Although agri-food shippers would be willing
     pests or animal diseases, such as shipments                        to participate, they cannot take advantage of
     of automotive parts.                                               C-TPAT or other programs that commit to
                                                                        expedite entry of products through U.S. ports
     Recommendation                                                     of entry, even for the many FDA regulated
                                                                        products that contain minimal amounts of
              The USDA should immediately waive                         beef or poultry ingredients. This has resulted
              the APHIS fee for all modes of                            in blanket regulation for agri-food, no matter
              transportation for participants in                        how low the risk, and an inefficient and cost-
              trusted shipper programs such as C-                       ly allocation of scarce public resources to
              TPAT and FAST.                                            inspect, test, and analyze imported foods. In
                                                                        the highly integrated North American agri-
     Food and Agriculture Exports:                                      food industry one cannot "inspect your way
     Low-Risk Food Importer and                                         to safety". Food safety risk management
     Preclearance                                                       begins far back in the growing and produc-
                                                                        tion process, where both Canada and the
     Since 9/11, the United States has enacted the                      United States have very sophisticated regula-
     largest expansion of enforcement authority                         tory standards and enforcement mechanisms.
     since food safety laws were first implemented
     in the early 20th century. As a result of these                    The Canadian and U.S. governments should
     new laws, regulations, and border process                          develop a program that expedites shipments
     fees, such as APHIS, wait times at U.S. ports                      for qualified agri-food exporters. The first
     of entry have increased, resulting in costly                       step would be to launch a program for low-
     delays. For example, though recently lifted in                     risk food Canadian and U.S. exporters. Foods
     the last few months, Canadian meat                                 produced by companies with a demonstrated
     exporters had faced a whole new wave of                            history of compliance and safety would
     "hold and test" at the border, including for                       receive expedited treatment at the border,
     ready-to-eat meat products where the rate of                       reducing both costs and delays.
     random testing for Listeria and Salmonella
     had doubled as a result of the E.coli contami-                     Furthermore, the Canadian and U.S. govern-
     nation of beef in Alberta. The entire                              ments should commit to the development of
     Canadian industry, including companies with                        preclearance processes for low-risk food
     a U.S. parent, paid the price for one bad                          processors. For instance, most major
     event at one plant.                                                Canadian and U.S. processors, many of which
                                                                        are owned by a U.S. parent, who export to
     The creation of C-TPAT, PIP, FAST, NEXUS, and                      the United States have facilities within one to
     other expedited treatment of goods and peo-                        two hours of U.S. ports of entry. As part of
     ple demonstrates both Canadian and U.S.                            any reputable company’s supply chain, food
     government support for trusted shipper and                         shipments are securely sealed at processing
     traveler programs. However, because of U.S.                        facilities to ensure integrity. Those seals are
     regulations that govern meat imports from                          often broken at ports for inspections, and
     Canada (i.e. the so-called “Minimal Risk                           then replaced with new government seals.
     Region Rule”), most food shipments from


10   Finding the Balance: Reducing Border Costs While Strengtheing Security
Since Canadian Food Inspection Agency                       Application of Health Certificate
(CFIA) inspectors, operating under                          Stickers on Individual Case
Memoranda of Understanding (MOUs) with                      Shipments
the FDA and USDA, are often present at pro-
cessing facilities (especially for meat and poul-           In November 2005, the USDA changed an
try products regulated by the USDA), many                   important policy that dramatically increased
processes conducted at ports of entry could                 costs related to shipping meat and poultry
be conducted at the processing facility. This               food products from Canada. They required
includes conducting all the processes associat-             that health certificate numbers – obtained
ed with secondary inspections, including                    from a veterinarian late in production – be
pulling samples for further analysis, reviewing             printed on each individual case shipment.
all documentation, and applying secure gov-                 Previously, it was common practice to place a
ernment seals to shipments as they leave the                placard on a pallet so that border inspectors
manufacturing facility. With such a system in               could see that regulations were being fol-
place, trucks could be precleared and expedit-              lowed. Complying with this new regulation
ed across the border by amending prior noti-                costs one food exporter approximately
fication procedures to include some indicator               $700,000 USD annually.
that the shipment has been approved for
entry into the United States and by simply                  Not only must this information now be
ensuring that the seal is still intact. These pro-          placed on each individual case, usually
grams would be further enhanced by making                   through a labor-intensive procedure, each
progress on mutual recognition with various                 case on a pallet must be situated so that the
food safety programs.                                       sticker can be seen from the outside of the
                                                            pallet. The new regulation conveys no benefit
Recommendations                                             to consumers, because the information is only
                                                            meaningful to border inspectors to ensure all
•        Within the next six months, the                    applicable food safety regulations are being
         Canadian and U.S. governments                      met. Each case, and even each individual
         should commit to the development                   food package, comes with preprinted lot
         of a pilot program along the Canada-               numbers that permit food safety officials to
         U.S. border to expedite processing of              trace any questionable products back to the
         qualified low-risk food importers                  time and location of production. This regula-
         from Canada and the United States.                 tion has not increased food security in any
                                                            way.
•        The Canadian and U.S. governments
         should commit to the development                   Canada also imposes the same regulation on
         of preclearance processes for food                 U.S. exporters of meat and poultry.
         processors. The CFIA, FDA, and                     Rescinding this regulation in both countries
         USDA should begin discussions on a                 will greatly reduce costs to agri-food compa-
         pilot program to test this concept,                nies with highly integrated North American
         involving a pilot with a small number              supply chains and distribution systems.
         of volunteer processors and one port
         of entry within the next 12 months.



                                                     Section 2: Priority Near-Term and Achievable Recommendations   11
     Recommendation                                                     the trade community to participate in valu-
                                                                        able CBSA policy and programs, such as
               The Canadian and U.S. governments                        advanced electronic reporting and CSA.
               should cease requiring that health                       Furthermore, duplicative information must be
               certificate numbers— obtained from                       submitted to a number of different agencies
               a veterinarian late in production—be                     in different formats (electronic or paper-
               printed on each individual case ship                     based). We strongly support that the Single
               ment.                                                    Window Interface being led by CBSA and
                                                                        urge all OGDs to join CBSA and move beyond
     Other Government Departments:                                      paper-based systems. This will eliminate bur-
     Single Window Initiative                                           densome duplicative requirements and facili-
                                                                        tate compliance with cross-border proce-
     A major frustration for industry is the lack of                    dures.
     a single window or integrated trade data
     management system on the Canadian and                              Recommendations
     U.S. sides of the border. Currently in the
     United States, there are four systems serving                       •      Both the Canadian and U.S. govern-
     the various mandates in relation to customs                                ments should work with their
     administration, food safety, and bio-security:                             respective agencies and departments
     two under CBP, one FDA system, and one                                     and implement the Single Window
     USDA system. Often the same information                                    Interface and International Trade
     has to be entered into each system.                                        Data System (ITDS).

     We are supportive of the U.S. International                         •      The United States should ensure that
     Trade Data System (ITDS) initiative. The ITDS                              all relevant federal agencies comply
     would provide a single window through                                      with Executive Order 13439 and
     which the trade community would submit its                                 ensure that they are actively using
     commercial data. Participating government                                  ITDS by 2009.
     agencies would have access to ITDS, eliminat-
     ing duplicative procedures and providing                            •      Within the next 12 months, all
     access to more accurate and timely informa-                                Canadian agencies and departments
     tion. While this initiative was introduced in                              with border-related requirements
     the 1990s, progress has been modest. We                                    should produce a publicly-stated
     strongly support the requirement in U.S.                                   timeline for adapting their require
     Executive Order 13439 that all relevant U.S.                               ments to meet the single window
     government agencies use ITDS by 2009.                                      platform within the next three years.

     In Canada, CBSA is not the sole government                         The implementation of the above recommen-
     agency responsible for regulations on the                          dations will ensure cross-border trade infor-
     import and export of goods but is expected                         mation is more accurate and easily accessible
     to enforce many of the regulations of other                        by all government departments and agencies
     government departments (OGDs) such as                              and can be the starting point of a more long-
     CFIA and Transport Canada. Current OGD                             term strategy to develop a fully secure and
     regulations significantly restrict the ability of                  interoperable customs system within North


12   Finding the Balance: Reducing Border Costs While Strengtheing Security
America. This will further reduce costs and               U.S. businesses that provide goods and servic-
duplicative efforts, while improving risk mod-            es to these carriers. One trucking company
eling and the predictability of the Canada-               reported additional costs of $1,000 CAD per
U.S. border.                                              load associated with moving shipments
                                                          through northern Ontario
Support for Inland Clearance
                                                          instead of south of the Great Lakes as a result
For some time now, CBSA has been talking                  of increased mileage, accident risk, and tran-
about a new requirement to release all goods              sit delays. CBSA and CBP are currently work-
at the first point of arrival into Canada.                ing on the issue.
Carriers that currently move some shipments
into bonded sufferance warehouses for                     Recommendation
release, or in some cases to their own secure
warehouses would lose this option. This                             The Canadian and U.S. governments
would be especially problematic for less-than-                      should work together to simplify data
truckload carriers that could see dozens of                         requirements for domestic in-transit
shipments from a single truck held up at the                        freight movements.
border while CBSA either examines, or waits
for additional data on a single shipment.                 Short Sea Shipping Pilot Program
                                                          in the Great Lakes Area
Recommendation
                                                          Another way of reducing border costs and
        CBSA should retain the bonded                     wait times is to provide additional modes of
        sufferance and secure warehouses                  transportation. Short Sea Shipping involves
        for carriers and should state its inten-          operation of a scheduled freight ferry service
        tion to do so as soon as possible.                in the Great Lakes area. The intention is to
                                                          use ferries to transport only commercial
Harmonized Electronic In-Transit                          cargo. The proposed service would transport
Process                                                   truck trailers containing commercial cargo
                                                          with the cabs and drivers not accompanying
Introduction of ACE and prior notice in the               the loaded trailers. Instead, the trailers would
United States has created a situation where               be delivered to the ferry by one driver and
there is no longer a harmonized Canada-U.S.               picked up at the destination by a different
in-transit process. Furthermore, the                      driver. In comparison, a truck must travel
Bioterrorism Act also requires prior notice,              more than five and a half hours (466 km)
affecting the movement of FDA regulated                   from London, Ontario to Cleveland, Ohio to
products. As a result, data requirements are              navigate around Lake Erie. In the marine
such that much of the trucked freight that                mode, the water portion of the multimodal
previously moved south of the Great Lakes                 journey is only 105 km across Lake Erie. The
now must move through Canada. This adds                   marine mode is not only efficient but also a
significant extra mileage on moves between                proven environmentally friendly form of trans-
eastern and western Canada, driving up costs              portation, resulting in a significant reduction
and removing economic benefits for many                   in greenhouse gases and congestion at bor-



                                                   Section 2: Priority Near-Term and Achievable Recommendations   13
     der crossings by providing another transporta-                     Trusted Travelers and
     tion option.                                                       Legitimate Business/Personal
                                                                        Travel
     Short Sea Shipping provides savings to truck
     companies through fuel savings, driver wait-                       NEXUS
     ing time cost savings, insurance and other
     driver costs. Furthermore, it helps relieve con-                   We strongly support the NEXUS program as
     gestion at truck border crossings and removes                      another example of a way to meet the mutu-
     some traffic from over crowded highways. A                         ally dependent goals of North American secu-
     similar case can also be made for short sea                        rity and prosperity. NEXUS is an established
     shipment of low-risk bulk cargo.                                   biometric-based program designed to expe-
                                                                        dite border clearance for low-risk, pre-
     Current interpretation of U.S. legislation on                      approved travelers in Canada and the United
     the definition of a ferryboat would classify                       States. Applicants go through a detailed reg-
     this operation as ‘vessel driven’, and therefore                   istration and interview process and must pass
     require the operators to send border officials                     risk assessment in both countries to be
     an electronic manifest 24 hours before the                         deemed eligible for participation in the pro-
     cargo is loaded on to the vessel—even                              gram.
     though the exact same trailers would only
     require one or two hours notice if they were                       NEXUS members bypass lengthy international
     ‘ferried’ into the United States using a truck                     arrival lines, and can clear customs and immi-
     or rail respectively. Based on the short-term                      gration in as little as a minute. It is an inte-
     cargo turnover in a Short Sea Shipping opera-                      grated program and can be used in air (using
     tion, the regulation’s interpretation makes this                   dedicated kiosks at eight Canadian airports),
     initiative unfeasible. Short Sea Shipping oper-                    land (using dedicated lanes at 13 land border
     ations should be treated in the same manner                        crossings), and marine travel between Canada
     as rail and truck.                                                 and the United States. CBP and CBSA are
                                                                        able to focus their limited inspection
     Recommendation                                                     resources on higher-risk travelers.

                Within the next 12 months the                           With NEXUS being rolled out widely in the
                Canadian and U.S. governments                           summer of 2007, it has not yet enjoyed wide-
                should work together to launch a                        spread participation. Currently there are
               private sector driven Short Sea                          approximately 170,0006 participants. NEXUS
               Shipping pilot project in the Great                      lanes at some border crossings and airports
               Lakes area and ensure that Short Sea                     have the capacity for higher traffic especially
               Shipping operations face the same                        when compared to adjacent, congested line-
               entry and clearance requirements as                      ups going through the regular channels. At
               rail and truck.                                          some border-crossing points, infrastructure
                                                                        constraints limit access to NEXUS lanes until
                                                                        just before the border, limiting its attractive-
                                                                        ness for travelers who cross frequently. Some
                                                                        NEXUS users report higher levels of spot

      6Canada Border Services Agency. 2008.


14   Finding the Balance: Reducing Border Costs While Strengtheing Security
checking, which makes them question the                 Cross-Border Business Travel
value of their enrollment.                              Facilitation
                                                        With the growth of cross-border business, the
Increasing enrollment will boost the number             increasing demand for qualified personnel
of preapproved and low-risk travelers                   and the increasing scarcity of skilled person-
between Canada and the United States, facili-           nel, there is a need for accelerating travel
tating cross-border travel and in the end,              between Canada and the United States for
enhancing North American security. To ensure            executives, professionals, and technical
more success, there is a need for further               specialists.
expansion of current marketing campaigns
undertaken by CBP, CBSA, and business                   Labor market conditions and skills shortages
stakeholders, an enhancement of the                     are different now than when the North
programs accessibility and transparency, and            American Free Trade Agreement (NAFTA)
better infrastructure that allows NEXUS to              established a framework for expediting
deliver its promised benefits.                          legitimate cross-border travel. Cross-border
                                                        business travel needs targeted interagency
Furthermore, NEXUS cards can be revoked                 collaboration to remove unnecessary
and renewal denied without explanation.                 obstacles. Business travelers frequently use
Since the establishment of the NEXUS                    one of two visas for travel to Canada and the
program, there has been concern about the               United States; the intra-company transfer visa
inability to request a review of NEXUS denial           and the NAFTA Professional visa. Rules
and/or revocation. Providing the option for a           designed to facilitate business travel exempt
secondary examination/review will enhance               these visas from the requirement for approval
fairness and eliminate the uncertainty without          by a consular post. Applicants present their
jeopardizing the security of the program.               completed documentation at a port of entry,
                                                        where CBP or CBSA officers are authorized to
Recommendations                                         adjudicate the visa. However, there is no
                                                        assurance that the qualified individual will be
•       The Canadian and U.S. governments               granted entry into either country.
        should continue to market the
        benefits of the NEXUS program with              This inconsistent treatment is due mostly to
        the target of one million NEXUS par-            the lack of adequate training for inspecting
        ticipants within the next 18 months.            officers of the visa's requirements and the
                                                        applicable business arrangements and rela-
•       CBP and CBSA should create a for                tionships—leading to undue delays or incor-
        mal review process for NEXUS                    rect denial of entry. The slightest irregularity
        rejections or revocations within the            may trigger a refusal from the inspecting
        next 12 months.                                 officer—a refusal that cannot be appealed.
                                                        The business traveler must then cancel his or
                                                        her obligations in Canada or the United
                                                        States without notice.




                                                 Section 2: Priority Near-Term and Achievable Recommendations   15
     While some positive steps have already been                        Recommendations
     taken on both sides of the border to address
     this issue, more must be done. For instance,                        •    The Canadian and U.S. governments
     some U.S. border-crossing posts have institut-                           should establish a mechanism for
     ed a practice of accepting required forms and                            multiple entries by executives, techni-
     documents in advance to adjudicate visas. In                             cal, and professional citizens and
     Canada, Citizenship and Immigration Canada                               permanent residents of Canada and
     introduced Temporary Foreign Worker Units                                the United States. This would include
     (TFWUs), currently located in Calgary,                                   an optional preapproval process for
     Montreal, and Vancouver, to facilitate legiti-                           qualified individuals to obtain
     mate business travel by offering guidance and                            necessary visas/approvals. Under this
     prescreening to employers seeking temporary                              new program, qualified personnel
     foreign workers and foreign professionals,                               would be required to be accepted
     including those that meet NAFTA qualifica-                               under a trusted traveler program
     tions.                                                                   (e.g. NEXUS). The enhanced NEXUS
                                                                              Global Enrolment System database
     Both these programs greatly reduce the                                   would include both the trusted trav-
     unpredictability of professionals and intra-                             eler data and essential visas/approvals
     company transferees from Canada and the                                  information needed for multiple
     United States crossing the border because                                entries. A pilot should commence
     both prescreen all supporting documents in                               within the next 12 months.
     advance, facilitating the issuance of the work
     permit at the border.                                               •    Some U.S. border-crossing posts have
                                                                              instituted a practice of accepting
     Inconsistencies with visa issuance for legiti-                           required forms and documents in
     mate business travel impede the normal con-                              advance to adjudicate visas, and this
     duct of business between Canada and the                                  practice should be universally adopt
     United States. Expanding current preclearance                            ed at all ports of entry.
     services and enhancing the trusted traveler
     program would provide assurance that quali-                         •    Citizenship and Immigration Canada
     fied individuals have predictable access to the                          should expand the Temporary Foreign
     border, facilitating the movement of legiti-                             Worker Units (TFWUs) to other
     mate business travelers, while ensuring secu-                            provinces such as Ontario and in the
     rity needs have been met.                                                Maritimes to create more certainty
                                                                              for temporary U.S. workers or busi-
                                                                              ness visitors entering Canada.




16   Finding the Balance: Reducing Border Costs While Strengtheing Security
Enhanced Drivers’ Licenses

The Canadian and U.S. business community is               U.S. states. We applaud the foresight of the
concerned that there will not be a critical               governments who have become early
mass of WHTI-compliant documentation in                   adopters.
circulation before its target June 2009 imple-
mentation. Without this critical mass, WHTI               One of the limitations of the EDL is that it is
implementation will lead to further conges-               available only for land and sea and is not
tion at the border with travelers arriving with-          acceptable documentation if a person who
out proper documentation. The resulting                   normally crosses the border by automobile
lengthy wait times will have many Canadian                needs to return travel by air. A broader, more
and U.S. tourists and business people avoid-              universal acceptance of the EDL is needed to
ing cross-border travel, worsening an already             facilitate travel in all modes of transportation
critical situation.                                       across the Canada-U.S. border.

Enhanced drivers’ licenses (EDL), denoting                Recommendations
identity, citizenship, and containing vicinity
radio frequency identification (RFID) technolo-            •        The federal, state, and provincial gov-
gy and security features, hold significant                          ernments of Canada and the United
potential to represent a less expensive and                         States should devote the necessary
more practical form of documentation than a                         funds and resources to ensure that
passport for the many Americans and                                 the development of EDLs are under
Canadians whose international travel interests                      taken and accepted at all border
are limited to our two countries. EDLs are                          crossings. An extensive and broad
vital to ensuring WHTI is smoothly imple-                           communications plan, aimed at all
mented and the security needs of North                              drivers and clearly identifying the
America are met without impeding the move-                          benefits of the optional enhanced
ment of people, goods, and services across                          identification, is needed. Finally, the
the border. We firmly support the CBSA and                          implementation must be rapidly
DHS determination that they will be consid-                         deployed to ensure a critical mass of
ered WHTI-compliant documentation.                                  EDLs is in circulation before WHTI
                                                                    comes into effect in mid-2009.
These drivers’ licenses must be more afford-
able than a passport and be more easily                    •        The EDL should be a compliant
attainable through provincial or state licens-                      document for Canada-U.S. air travel.
ing offices. We are very encouraged by the
positive first steps that have taken place. For
example, the enhanced drivers’ license cur-
rently available in Washington State only
costs an additional $15 USD. The Province of
British Columbia will be offering EDLs shortly
and exploratory expressions of interest are
coming from other Canadian provinces and



                                                   Section 2: Priority Near-Term and Achievable Recommendations   17
     People Access Security Service                                     Recommendations
     (PASS) Cards
                                                                        •     The PASS Card should be accepted at
     The People Access Security Service (PASS)                                air ports of entry when travelling
     Cards, also referred to as the U.S. Passport                             from Canada, as well as the pro-
     Card, will be another wallet-sized alternative                           posed land and sea ports of entry,
     to a U.S. Passport designed to facilitate effi-                          making it a full passport substitute
     cient and secure cross-border travel at land                             under WHTI.
     and sea ports of entry. Business has long
     advocated for the development of this alter-                       •     The cost of the PASS Card should be
     native prior to full implementation of WHTI                              $20 USD for adults and $10 for
     and continues to urge the U.S. government                                minors, regardless of whether it is a
     to make it truly economical to obtain and                                renewal or original application, if it is
     acceptable at all ports of entry, including air.                         truly to be an economical substitute
                                                                              to a passport.
     Currently, first-time applicants who have not
     owned a passport would pay an application                          •     The PASS Card should not be bur-
     fee of $45 USD for adults and $35 USD for                                dened with the same additional
     minors (under age 16). There is a lower                                  "fees" and "charges" already
     application fee of $20 USD for adults and                                imposed on passport applications,
     $10 USD for minors, if they have already                                 e.g., there should be no execution or
     owned a passport. In addition, applicants                                picture fee, making PASS Cards a
     applying in person will have to pay an addi-                             truly economical alternative to a
     tional "execution fee" of $25 USD. Many                                  passport. Furthermore, special
     applicants will be required to apply in person                           discounts should be made available
     and will thus be subject to this fee, such as                            to families applying for several PASS
     first time adult passport applicants, all minors,                        Cards at a time.
     adults holding expired passports issued more
     than 15 years previously or when the bearer                        •     The time frame for production of a
     was a minor, and those applying for replace-                             PASS Card should be significantly
     ment passports that have been lost, stolen, or                           shorter than for a passport, increas-
     mutilated. In addition, there is currently about                         ing its appeal and eliminating the
     a $15 USD fee for pictures taken at the gov-                             need to increase its cost even further
     ernment application center. Thus, what starts                            with expediting fees.
     as a $45 USD alternative to the $115 USD
     passport ($75 USD-application fee, $25 USD-
     execution fee, and $15 USD-picture fee)
     becomes an $85 USD alternative ($45 USD-
     application fee, $25 USD-execution fee, and
     $15 USD-picture fee). These costs do not take
     into consideration possible expediting fees,
     given there is no indication the time frame
     for production of a PASS Card will be any
     shorter than for a passport.


18   Finding the Balance: Reducing Border Costs While Strengtheing Security
Secure Vicinity RFID Technology                                           Recommendation

In the coming months, vicinity RFID technolo-                                         The Canadian and U.S. governments
gy will be installed at 39 U.S. border cross-                                        must advance the implementation of
ings, representing 95 percent of all U.S. cross-                                     secure vicinity RFID technology at all
border traffic, to screen those entering the                                         major border crossings and
United States7. This technology will transmit                                        encourage travelers to obtain docu-
a number, with no personally identifiable                                            mentation that uses this technology.
information included, to a DHS database,
providing CBP border officers with the neces-                             Secure Flight/APIS Quick Query
sary information to make critical decisions                               (AQQ) Notice of Proposed Rule
about passengers entering or reentering the                               Making (NPRM)
United States.
                                                                          In August 2007, the U.S. Transportation
                                                                          Security Administration (TSA) published a
This technology is expected to substantially
                                                                          Notice of Proposed Rulemaking (NPRM)
decrease border wait times. For instance, the
                                                                          requiring air carriers to collect and transmit
average wait time at the Peace Arch crossing
                                                                          additional passenger information. While we
is 65 minutes. If all border crossers have iden-
                                                                          support the goals of the Secure Flight
tification with RFID proximity capabilities,
                                                                          Program to identify and focus aviation securi-
such as passports, and all booths are
                                                                          ty efforts on high-risk passengers, we are very
equipped with such technology, the average
                                                                          concerned about the proposed rule’s poten-
wait time is expected to decrease to 26 min-
                                                                          tial impact on North American air travel.
utes. The use of vicinity RFID cards, such as
NEXUS, FAST, and EDL, would reduce the
                                                                          Of particular concern is the requirement for
average wait time even more (to an estimated
                                                                          Canadian carriers to provide full passenger
eight minutes if every traveler had this type of
                                                                          data from all carriers’ overflights through U.S.
identification)8. Today, it has been estimated
                                                                          airspace on their way to another country.
to take eight seconds for border officers to
                                                                          Under the proposed rule, Canadian carriers
gather documents from occupants in a vehi-
                                                                          would be required to collect and submit pas-
cle and fifteen seconds to process the infor-
                                                                          senger data to TSA up to 72 hours in
mation9. Multiply this by even a thousand
                                                                          advance, for flights that originate in Canada,
border crossings, it is no surprise there are
                                                                          never land in the United States, and termi-
significant wait times. Secure vicinity RFID
                                                                          nate in a third country. This requirement
technology will completely eliminate such a
                                                                          would place an undue burden on Canadian
process with the occupant’s information
                                                                          carriers who would be required to modify
appearing on the border official’s computer as
                                                                          their systems to collect, store, and transmit
they arrive at the border. With the forthcom-
                                                                          significant amounts of new information on
ing implementation of the WHTI, wait times
                                                                          their passengers.
would be reduced by a critical mass of border
crossers having a piece of documentation
that uses secure vicinity RFID technology.



7Bob Brewin. 2008. “State, DHS grant RFID contracts to speed border crossings”. Government Executive.
8US-VISIT Time Study provided by the Can/Am Border Trade Alliance.
9Public Border Operators Association. 2007.

                                                                 Section 2: Priority Near-Term and Achievable Recommendations   19
     Canada already requires that all airlines with                     critical importance of the border requires
     flights in or out of Canada check their pas-                       funding for adequate numbers of officials
     senger lists against Canada’s own Specified                        who are fully trained and consistently apply
     Persons List, which was developed in close                         all needed border procedures.
     cooperation with the U.S. government.
     Additionally, U.S. carriers regularly over-fly                     Under the current contract between CBSA
     Canada. The Secure Flight Program could                            and a service provider, offload services for
     potentially expose U.S. carriers to costly and                     inspections are available during only a portion
     burdensome reciprocal requirements.                                of regular business hours. After these arbi-
                                                                        trarily set hours, when much of the freight
     Recommendation                                                     crosses the border, a carrier will have to wait
                                                                        up to two hours for personnel to arrive at the
              The U.S. government should exempt                         border and conduct an inspection. The entire
              Canadian overflights that originate                       process of offloading, inspecting, and reload-
              from or destined to a third country                       ing can take up to six hours. The actual cost
              from the data requirements of the                         per inspection can be several hundred dollars.
              Secure Flight Program.                                    The minimum hourly charge, in addition to
                                                                        attendant delays, drives up costs, causes carri-
     Additional Measures                                                ers to miss delivery windows, hampers just-in-
                                                                        time delivery practices, and in some cases
     Increasing Staffing, Training, and                                 puts a driver over the legal duty time limit.
     Hours of Services at Border
     Crossings                                                          Another serious impediment is the limited
                                                                        number of hours of operation for other gov-
     A major concern for the Canada-U.S. busi-                          ernment agencies that inspect cargo, such as
     ness community is that not all border booths                       the FDA. Canadian and U.S. companies are
     are operational during peak commercial and                         constantly experiencing delays as a result of
     tourist travel times at major crossings, result-                   the lack of resources. This is especially acute
     ing in increased border wait times for every-                      on weekends where shipments can be held
     one. This has a direct negative impact on just-                    up for days. Border and inspection services
     in-time logistics practices and indeed affects                     must be offered on a 24/7 basis at major
     all cargo, business travel, and tourism                            crossings, meeting the needs of the move-
     between Canada and the United States.                              ment of cargo and travel.
     Traffic patterns, especially for commercial traf-
     fic, are, to a large extent, predictable and
     should drive staffing levels rather than time of
     day. Offering 24/7 services, including those of
     other government departments and agencies
     that conduct border inspections, and operat-
     ing all booths at major border crossings dur-
     ing key operating hours will ensure the effi-
     cient use of existing facilities and support
     Canada-U.S. competitiveness. Of course, the



20   Finding the Balance: Reducing Border Costs While Strengtheing Security
During the past year, CBP began rolling out a                              A Workaround for the Peace Arch
phased requirement that trucks transmit                                    Border Crossing
advance cargo information to CBP via the
ACE Truck Manifest System (e-Manifest). An                                 In the British Columbia (B.C.) lower mainland,
ongoing complaint from carriers during this                                there are only three full-service border cross-
startup phase has been the quality and timeli-                             ings for the 10 million people that live in B.C.
ness of help desk/technical support.                                       and Washington State and the almost three
Businesses experiencing a problem with an                                  million people along the B.C.-Washington
electronic manifest need access to 24/7 sup-                               State border: the Douglas (Peace Arch),
port from qualified individuals to ensure                                  Pacific (truck), and Huntingdon/Sumas cross-
trucks and drivers are not delayed at the bor-                             ings. The Aldergrove crossing is another
der for hours on end. Today, delivery sched-                               option for general and commercial traffic, but
ules are being disrupted and drivers are put                               is currently only open from 8:00 a.m. until
over their legal duty time limit. While CBP has                            midnight.
made efforts to improve the situation, more
needs to be done to address the volume of                                  The relationship between British Columbia
inquiries. While this is not a relevant matter                             and Washington State is an excellent example
today with CBSA, it could become an issue                                  of the highly integrated nature of the Canada
when the Canadian equivalent, Advanced                                     and U.S. economies. For instance, more than
Commercial Information (ACI) truck manifest,                               $10 billion USD in two-way trade travels
is implemented.                                                            between British Columbia and Washington
                                                                           State annually and approximately 32,000
Recommendations                                                            vehicles cross the B.C.-Washington State
                                                                           border every day. Furthermore, approximately
•          CBSA, CBP, and other government                                 30 percent of foreign visitors to British
           departments with border mandates                                Columbia also visit Washington State and the
           should make a priority of offering                              Pacific Northwest. This is expected to increase
           24/7 border services at all major                               with 25 percent of visitors to the 2010
           crossings with a published timeline                             Olympic and Paralympics Winter Games in
           on how this will be achieved within                             Vancouver, B.C. projected to travel through
           the next 18 months. This includes the                           Washington State on their way to the
           operation of border booths, second-                             games10. It is imperative that the necessary
           ary inspections, and border-related                             resources and functioning infrastructure be in
           support services.                                               place to facilitate this integrated relationship
                                                                           both today and for the 2010 Olympics.
•          Both the Canadian and U.S. govern-
           ments must ensure adequate funding                              The Peace Arch is the busiest border crossing
           is provided to efficiently deliver this                         in the B.C. lower mainland, receiving more
           report’s recommended border                                     than 4 million travelers in 1.4 million non-
           services, including the training of                             commercial vehicles in 2006/0711.
           border officials.                                               Forthcoming construction on the U.S. side of
                                                                           the Peace Arch border crossing is expected to

10Office of the Premier of British Columbia and Office of the Governor of Washington State. June 20, 2006. “B.C. and Washington Call to
Delay Passport Requirement”. News Release.
11Canada Border Services Agency. 2007.

                                                                  Section 2: Priority Near-Term and Achievable Recommendations            21
     reduce the number of lanes from nine to                            A Border Contingency Plan:
     three with construction expected to begin                          Deliver on Montebello
     this spring and not completed until January                        Commitments
     2010. This needed upgrade will limit the
     movement of cross-border travel at one of                          A smart and secure border is critical to the
     the busiest land-border crossings until all                        future well-being of the North American
     work is completed. To ease pressure off of                         economy. A pandemic, a natural disaster or
     the Peace Arch crossing, traffic will be                           terrorist activity could lead to a partial or full
     encouraged to use the Pacific Highway truck                        border closure. The inherent importance of
     crossing and the Huntingdon/Sumas crossing.                        the border necessitates a strong contingency
     The increased traffic will undoubtedly result in                   plan to deal with such a situation. While
     increased wait times, including at the truck                       progress has been made, Canada and the
     crossing, as passenger traffic is rerouted. This                   United States have not fully developed a for-
     has already created uncertainty around ship-                       mal border contingency plan to be used in
     ment arrivals and just-in-time logistics prac-                     the event of a full or partial closure to the
     tices. The Aldergrove crossing is the most                         Canada-U.S. land, sea, and airport border
     convenient alternative because it is only 20                       points.
     minutes from the Peace Arch; however, it
     does not offer 24/7 border services.                               The SPP announced in June 2005, that
                                                                        Canada, Mexico, and the United States were
     Recommendation                                                     committed to developing coordinated busi-
                                                                        ness resumption protocols for the border.
               To accommodate the upgrading of                          Following the announcement, Canada and
               the Peace Arch border crossing, with                     the United States, through the impressive
               out creating undue wait times at the                     work of its officials at CBSA and CBP, have
               other ports of entry, the Aldergrove                     started to develop a border contingency plan
               crossing should provide 24 hour                          in consultation with industry in both coun-
               access for both passenger and com-                       tries. We are encouraged by the recent
               mercial traffic, and both the Peace                      Communication and Coordination Plan devel-
               Arch and nearby ports of entry                           oped by both agencies and the prioritization
               should have sufficient staffing to                       framework efforts underway in Canada.
               operate all booths. Given the aging                      Furthermore, at the August 2007 SPP North
               infrastructure in a number of                            America Leaders Summit, the leaders
               locations along our shared border,                       announced the commitment to further devel-
               the model used to facilitate the move                    op a coordinated plan for the movement of
               ment of traffic during the upgrade of                    goods and people during and after an emer-
               the Peace Arch crossing can set a for                    gency.
               mal framework for future border
               construction projects.




22   Finding the Balance: Reducing Border Costs While Strengtheing Security
We strongly support the accelerated develop-
ment of a plan that could be used to priori-
tize ‘what should be expedited’ ensuring that
people or cargo that must get across the
border in an emergency or serious situation
can do so. Further work is also necessary on
the two-way, iterative communications frame-
work that will provide governments with the
relevant information needed for decision
making and keeping business informed and
on testing the frameworks to ensure they
work in practice.

Recommendation

        The Canadian and U.S. governments
        should work in partnership with the
        business community on both sides of
        the border to further develop the
        plan to manage the movement of
        people and goods during and follow-
        ing a full or partial closure of the
        border.




                                                Section 2: Priority Near-Term and Achievable Recommendations   23
24   Finding the Balance: Reducing Border Costs While Strengtheing Security
     3         List of Recommendations

We call on the governments of Canada and the United States to commit to fully deliver on these
recommendations within the next 18 months.

Trusted Shipper Programs                                     drivers into the TWIC program with
                                                             out requiring the driver to undergo
The Canadian and U.S. governments should                     additional screening, fees, or
establish goals and develop metrics to drive                 application process.
agency behavior and priorities that demon-
strate tangible benefits to program partici-        APHIS Recommendations
pants in trusted shipper programs within the
next six months.                                    The USDA should immediately waive the
                                                    APHIS fee for all modes of transportation for
The Canadian and U.S. governments must              participants in trusted shipper programs such
implement a strategy to agree on require-           as C-TPAT and FAST.
ments and establish reciprocity for all comple-
mentary freight security programs (including        Food and Agriculture Exports:
trusted shipper and credentialing programs).        Low-Risk Food Importer and
This strategy must also improve efficiency for      Preclearance
both government and industry by reducing
                                                    Within the next six months, the Canadian
duplicate fees and redundant implementation
                                                    and U.S. governments should commit to the
costs. This would include:
                                                    development of a pilot program along the
•       As committed in the SPP, Canada and         Canada-U.S. border to expedite processing of
        the United States entering into an          qualified low-risk food importers from
        agreement to mutually recognize             Canada and the United States.
        companies participating in the
        Canadian PIP program and the U.S.           The Canadian and U.S. governments should
        C-TPAT program no later than June           commit to the development of preclearance
        2008;                                       processes for food processors. The CFIA, FDA,
                                                    and USDA should begin discussions on a pilot
•       Canada and the United States ensur-         program to test this concept, involving a pilot
        ing that rail and truck cargo inspect-      with a small number of volunteer processors
        ed, cleared, and secured at a               and one port of entry within the next 12
        Canadian port is not subject to             months.
        further inspections at the U.S.
        border;                                     Application of Health Certificate
                                                    Stickers on Individual Case
•       Canada and the United States allow-         Shipments
        ing carriers without dedicated cross-
        border fleets to have a pool of FAST        The Canadian and U.S. governments should
        transponders and assign them to             cease requiring that health certificate num-
        vehicles as needed; and                     bers—obtained from a veterinarian late in
                                                    production—be printed on each individual
•       DHS should develop a process for            case shipment.
        automatically enrolling FAST-certified



                                                                    Section 3: List of Recommendations   25
     Other Government Departments:                                      Short Sea Shipping Pilot Program
     Single Window Initiative                                           in the Great Lakes Area

     Both the Canadian and U.S. governments                             Within the next 12 months the Canadian and
     should work with their respective agencies                         U.S. governments should work together to
     and departments and implement the Single                           launch a private sector driven Short Sea
     Window Interface and International Trade                           Shipping pilot project in the Great Lakes area
     Data System (ITDS).                                                and ensure that Short Sea Shipping opera-
                                                                        tions face the same entry and clearance
     The United States should ensure that all rele-                     requirements as rail and truck.
     vant federal agencies comply with Executive
     Order 13439 and ensure that they are actively
     using ITDS by 2009.                                                NEXUS

     Within the next 12 months, all Canadian                            The Canadian and U.S. governments should
     agencies and departments with border-related                       continue to market the benefits of the NEXUS
     requirements should produce a publicly-stated                      program with the target of one million
     timeline for adapting their requirements to                        NEXUS participants within the next 18
     meet the single window platform within the                         months.
     next three years.
                                                                        CBP and CBSA should create a formal review
                                                                        process for NEXUS rejections or revocations
     Support for Inland Clearance                                       within the next 12 months.

     CBSA should retain the bonded sufferance                           Cross-Border Business Travel
     and secure warehouses for carriers and                             Facilitation
     should state its intention to do so as soon as
     possible.                                                          The Canadian and U.S. governments should
                                                                        establish a mechanism for multiple entries by
                                                                        executives, technical and professional citizens,
     Harmonized Electronic In-Transit                                   and permanent residents of Canada and the
     Process                                                            United States. This would include an optional
                                                                        preapproval process for qualified individuals
     The Canadian and U.S. government should                            to obtain necessary visas/approvals. Under
     work together to simplify data requirements                        this new program, qualified personnel would
     for domestic in-transit freight movements.                         be required to be accepted under a trusted
                                                                        traveler program (e.g. NEXUS). The enhanced
                                                                        NEXUS Global Enrolment System database
                                                                        would include both the trusted traveler data
                                                                        and essential visas/approvals information
                                                                        needed for multiple entries. A pilot should
                                                                        commence within the next 12 months.
                                                                        Some U.S. border-crossing posts have institut-



26   Finding the Balance: Reducing Border Costs While Strengtheing Security
ed a practice of accepting required forms and      People Access Security Service
documents in advance to adjudicate visas,          (PASS) Cards
and this practice should be universally adopt-
ed at all ports of entry.                          The PASS Card should be accepted at air
                                                   ports of entry when travelling from Canada,
Citizenship and Immigration Canada should          as well as the proposed land and sea ports of
expand the Temporary Foreign Worker Units          entry, making it a full passport substitute
(TFWUs) to other provinces such as Ontario         under WHTI.
and in the Maritimes to create more certainty
for temporary U.S. workers or business visi-       The cost of the PASS Card should be $20
tors entering Canada.                              USD for adults and $10 for minors, regardless
                                                   of whether it is a renewal or original applica-
                                                   tion, if it is truly to be an economical substi-
Enhanced Drivers’ Licenses                         tute to a passport.

The federal, state, and provincial govern-         The PASS Card should not be burdened with
ments of Canada and the United States              the same additional "fees" and "charges"
should devote the necessary funds and              already imposed on passport applications,
resources to ensure that the development of        e.g., there should be no execution or picture
EDLs are undertaken and accepted at all bor-       fee, making PASS Cards a truly economical
der crossings. An extensive and broad com-         alternative to a passport. Furthermore, spe-
munications plan, aimed at all drivers and         cial discounts should be made available to
clearly identifying the benefits of the optional   families applying for several PASS Cards at a
enhanced identification, is needed. Finally, the   time.
implementation must be rapidly deployed to
ensure a critical mass of EDLs is in circulation   The time frame for production of a PASS Card
before WHTI comes into effect in mid-2009.         should be significantly shorter than for a
                                                   passport book, increasing its appeal and elim-
The EDL should be a compliant document for         inating the need to increase its cost even fur-
Canada-U.S. air travel.                            ther with expediting fees.



                                                   Secure Vicinity RFID Technology

                                                   The Canadian and U.S. governments must
                                                   advance the implementation of secure vicinity
                                                   RFID technology at all major border crossings
                                                   and encourage travelers to obtain documen-
                                                   tation that uses this technology.




                                                                   Section 3: List of Recommendations   27
     Secure Flight/APIS Quick Query                                    A Workaround for the Peace Arch
     (AQQ) Notice of Proposed Rule                                     Border Crossing
     Making (NPRM)
                                                                       To accommodate the upgrading of the Peace
     The U.S. government should exempt                                 Arch border crossing, without creating undue
     Canadian overflights that originate from or                       wait times at the other ports of entry, the
     destined to a third country from the data                         Aldergrove crossing should provide 24 hour
     requirements of the Secure Flight Program.                        access for both passenger and commercial
                                                                       traffic, and both the Peace Arch and nearby
                                                                       ports of entry should have sufficient staffing
     Increasing Staffing, Training and                                 to operate all booths. Given the aging infra-
     Hours of Services at Border                                       structure in a number of locations along our
     Crossings                                                         shared border, the model used to facilitate
                                                                       the movement of traffic during the upgrade
     CBSA, CBP, and other government depart-                           of the Peace Arch crossing can set a formal
     ments with border mandates should make a                          framework for future border construction
     priority of offering 24/7 border services at all                  projects.
     major crossings with a published timeline on
     how this will be achieved within the next 18
     months. This includes the operation of border                     A Border Contingency Plan:
     booths, secondary inspections, and border-                        Deliver on Montebello
     related support services.                                         Commitments

     Both the Canadian and U.S. governments                            The Canadian and U.S. governments should
     must ensure adequate funding is provided to                       work in partnership with the business com-
     efficiently deliver this report’s recommended                     munity on both sides of the border to further
     border services, including the training of bor-                   develop the plan to manage the movement
     der officials.                                                    of people and goods during and following a
                                                                       full or partial closure of the border.




28   Finding the Balance: Reducing Border Costs While Strengtheing Security
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