A dead end for free trade? II

mistrust,” the diplomat explained. When Chertoff took over at DHS in 2005, co-operation between the two countries faltered. “Chertoff represents that feeling that ‘if we don’t control it, we can’t trust it.’” The success of two pivotal security deals between the two countries — the 2002 Smart Borders initiative and its 2005 offspring, the Security and Prosperity Partnership (SPP) — depend on intense bilateral trust. Under the SPP, Canada, the United States, and Mexico agreed to co-ordinate their border-related security policies, while mitigating economic harm by targeting high-risk people and goods. Most Canadian and U.S. officials quietly acknowledge the SPP has stalled. Smart has become thick. It is telling that in spite of those deals Ottawa has lost repeated rounds with determined U.S. officials. As a result, Canadians were hit with more stringent U.S. border measures, including new passport rules, increased inspections and a devastating two-year ban on Canadian cattle and beef as a result of the mad-cow scare. In 2006 it lost a battle to preserve a long-standing exemption from hefty U.S. animal and plant inspection fees. Last year, Canada and the U.S. scrapped a pilot project to relieve border congestion by moving U.S. customs inspections onto Canadian soil at the Peace Bridge crossing to Buffalo, New York, and elsewhere. These setbacks are an ominous sign for the Canadian economy, for which the U.S. market is its lifeblood. More than 70 percent of Canada’s exports go to the United States ($313 billion last year), generating a quarter of Canada’s gross domestic product and sustaining three million jobs. More than a quarter of two-way trade — $122 billion worth and three million trucks — passes through Windsor. This is more than any other land border in the world and more trade than the United States does with Japan.

The FTA, and the later North American free-trade agreement, accelerated a trend to economic integration between the two countries. Companies located plants on both sides of the border, buying from suppliers wherever it made the most economic sense, and selling to customers in either country. As much as 40 percent of Canada-U.S. trade is within companies. The model of integration is the auto industry, where parts and cars cross the border multiple times. The trend has spread to aerospace, machinery, mining, energy, food, and agriculture. Quantifying the impact of added security, delays, and hefty new fees is not easy. The border is just