Emmanuel Brunet-Jailly A new border? A Canadian perspective of the Canada-US border post-9/11 Canada and the United States form a highly integrated economic region; indeed, since the signing of the North American Free Trade Agreement (NAFTA) in 1993, economic integration of the two countries has progressed faster than economic growth. In the 1990s scholars suggested that the primary characteristic of the Canada-US border and surrounding regions was an environment facilitating the seamless flow of goods and capital. But since 9/11, borders have hardened, and some argue that securitization has impeded trade and is now affecting all policy arenas concerned with borderlands. This article is a review of those arguments. In this article I show that since 9/11, Canada and the US have worked out a border policy that is generally “harder” but “softer” for pre-cleared goods and people. First, I give an overview of the state of cross-border relations and policies before 9/11. I then review the current status of free trade and economic integration in the context of arguments that post-9/11 policies hardened the border to suggest that Canada and the US have safeguarded and deepened their friendship since 9/11 and to make some inferences about the future of Canada-US border relations. Emmanuel Brunet-Jailly is Jean Monnet Chair of the School of Public Administration at the University of Victoria, British Columbia. | International journal | Autumn 2012 | 963 || Emmanuel Brunet-jailly | A SEAMLESS BORDER BEFORE 9/11? Academics argued in the 1990s that the Canada-US border was increasingly transparent to trade. At the time scholars noted that for the past 25 years, the internationalization of the economy had increased the influence of market forces, and that states had increasingly been “risking free trade.” The signing of NAFTA represented a turning point in North American trade relations; concurrently, states were losing the capacity to regulate effectively within national boundaries.* Regional studies attributed this shift to economic reorganization.’ This literature assumed that the world transformation resulted from economic restructuring which, in turn, the North American free trade regime enhanced. Some argued that NAFTA leads to the development of a borderless world, as regions will be delineated only by the sharing of information and goods, rather than international borders. Kenichi Ohmae, for instance, when looking at similar policy mechanisms in Asia, suggested that the political influences of the regions in question did not match the economic influence of regional trade flows.* NAFTA AND ECONOMIC INTEGRATION The Canadian and US economies have become highly integrated. Since the 1990S, two-way trade between Canada and the US has more than doubled. This trade increase from US$45.6 billion in 1977 to US$818 billion (imports and exports) in 2010—an increase of 1,800 percent—was largely the result of the signing of the Canada-US free trade agreement (FTA) in 1988 and NAFTA in 1993. Originally, a few Canadian manufacturing sectors, particularly primary goods and automobiles, formed a unique economic ensemble with the US. In the 1990s 81 percent of all Canadian exports were end products and semi-manufactured goods, with an additional US$4z2 billion worth of services.° In 2009, total merchandise trade with 1 Michael Lusztig, Risking Free Trade: The Politics of Free Trade (Pittsburgh: University of Pittsburgh Press, 1996). 2 Lusztig, Risking Free Trade, 71-114 and 120-121. 3 Kenichi Ohmae, The Borderless World (New York: Harper, 1990); The End of the Nation State (New York: Free Press, 1995). 4 Ohmae, End of the Nation State. 5 See Statistics Canada, “Imports and Exports, and Trade Balance, October 2011,” wwwstatcan.ge.ca. 6 Department of Foreign Affairs and International Trade (DFAIT), “NAFTA: The world’s most productive trading alliance,” www.international.ge.ca. | 964 | Autumn 2012 | International journal || Anew border | Canada was down to US$429.7 billion (a 28 percent decrease from 2008), consisting of US$224.9 billion (a 33 percent decrease from 2008) in imports and US$204.7 billion (a 21.5 percent decrease from 2008) in exports. In 2009, slightly less than US$r.2 billion in goods crossed the border each day. ‘Trade with Canada represented 16.4 percent of total US trade, with Canada purchasing 19.4 percent of US exports and supplying 14.4 percent of total US imports. Also in 2009, the US supplied 51.1 percent of Canada’s imports of goods and purchased 75 percent of Canada’s merchandise exports.’ Trade between the US and Canada expanded rapidly following the signing of the FTA in 1988. The goal of NAFTA, which came into force on 1 January 1994, was to expand trade and investment among Canada, Mexico, and the US. NAFTA did not modify the implementation of the 1988 FTA. It organized the phasing out of tariff and non-tariff barriers on originating goods. NAFTA also phased out certain rules and regulations regarding business practices and settlement of disagreements among the three countries. As of 1 January 2003, Canadian and US trade with Mexico was also free of tariffs. Canadian trade with the US is larger than that of Europe, Japan, or Mexico, which suggests that Canada and the US have the highest level of economic integration between two large countries in the world. The Department of Foreign Affairs and International Trade (DFAIT) estimates that Canada’s exports sustain 28 percent of its GDP and about 2 million Canadian jobs, and that the Canadian trade deficit with the US results from service, dividend, and tourism deficits. The FTA has allowed Canadians to secure their grasp of American markets, despite Asian and European competition.’ Of all the Canadian provinces, Ontario has the highest degree of economic interdependency with the US, particularly with the state of Michigan. Ontario trades more with the US than with any other Canadian province, and its trade with Michigan alone surpasses that of inter-provincial trade. 7 See lan F. Ferguson, “US-Canada Trade and Economic Relationship: Prospects and Challenges,” US Congressional Research Services, 2 September 2010, www.canada. usembassy.gov. 8 Thomas Courchene, From Heartland to North American Region State (Toronto: University of Toronto Press, 1998); Richard Fisher, “Testimony of Ambassador Richard Fisher,” www.ustr.gov; Danielle Goldfarb, “Beyond Labels,” C.D. Howe Border Papers 76 (2003) | International Journal | Autumn 2012 | 965 || Emmanuel Brunet-Jailly | Michigan and Ontario are highly interdependent.? Ontario, with a population of about 12 million, is Canada’s most populous and dynamic province, and it exploits effectively its locational advantage at the centre of the Great Lakes region and the northeastern US, where it is one trucking day from 125 million people, including about 20 million Canadians. In 2002, for instance, Ontario contributed about 50 percent of Canada’s GDP; it exported about $202 billion in goods, and 93 percent of its exports and 11 percent of its imports went to or came from the US. Ontario is by far Michigan's first trading partner, with $67 billion in exports and $30 billion in imports, or 33 percent and 14 percent, respectively, of all of Michigan's trade. (New York, California, Ohio, and Illinois come next, each responsible for between five and eight percent of all exports to Ontario.) Automobile invention and development in the Detroit-Windsor region in the early decades of the 20" century, along with the Auto Pact of 1965, are the origins of this trade flow. In 2002 Ontario's exports of motor vehicles, engines, and vehicle parts to Michigan amounted to about $50 billion. Today, the automotive sector accounts for more than 45 percent of all exports to and 30 percent of all imports from Michigan, and most of this two-way trade occurs between southwestern Ontario (Windsor) and the northeastern part of Michigan. Prem Gandhi's findings that 56 percent of all Canada-US merchandise trade occurs either between purchasers and subcontractors or between trade intra-firms that are established on both sides of the border strengthens the view that this region is economically integrated.” Before World War Two, British Columbia exported more to the United Kingdom (with 39 percent of total exports) than to the US (with 34 percent of total exports). In the 1950s, this trade balance shifted to 80 percent of all B.C. exports going to the US. During the 1970s, Japan's share as an economic partner of B.C. in wood, minerals, and fish products increased from 4 percent to 28 percent. Presently, the B.C. economy is evolving from a very strong dependency on forestry, mining, and fishing to supporting a tertiary economy with increased emphasis on tourism, public sector (health and education), and information and communication industries. New information-technology firms benefit from provincial incentives, and 9 See Ontario Ministry of Finance press release, www.ontario-canada.com. 10 Prem Gandhi and Wayne Glass, “Canadian Investment in the US: A Regional Perspective,” in Alan M. Rugman, ed., North American Economic and Financial Integration: Research in Global Strategic Management, Volume 10 (Castle Hill: NSW, 2004), 193-209. | 966 | Autumn 2or2 | International Journal. || Anew border? | the movie industry remains competitive despite the parity of the US and Canadian dollars. B.C. trade relations with the US remain strong. The US is the first customer of B.C.’s exports, importing Go.5 percent of B.C.’s commodity exports in 2007. Also, B.C. is home to nearly 84,000 US expatriates, and the US is the largest international travel market for B.C., making up about 70 percent of total entries to the province in 2010, or about five million visitors (both overnight and same-day) from the US. Before the signing of the FTA in 1988, the US imported only 28 percent of all B.C. goods and services. Today, however, with about $17 billion in exports to the US of a total $28 billion to the rest of the world, the B.C. economy relies increasingly on the rest of the world. Markets in Europe are constant, and exports to Asia have doubled, in particular to Japan and China. To sum up, in 1991, 42 percent of all B.C. exports were going to the US; in 2002 that percentage was 60; now it is back down to 46 percent. These statistics support the assumption that the Canadian and US economies are interdependent and remain so through fluctuations in the global economy. It is not surprising that, according to the Frankel test of economic integration, Ontario scores a ratio of 1.3 and British Columbia scores a ratio of 3.3. These results suggest that Ontario is almost perfectly integrated, while the intra-NAFTA trade of British Columbia should be 3.3 times greater to reach perfect economic integration in the North American economy.” The economic integration ratios point to the possible emergence of cross-border economic regions spanning the international boundary. Ontario and Michigan form an integrated economic region, which thrives on the automotive and high-technology sectors. In contrast, although B.C. and the northwestern US also form a large economic region, the region is not yet economically integrated. 11 The |. Frankel test suggests that in a perfectly integrated economy, transport is costless, there are absolutely no barriers to trade, no one has any national bias against goods or services from other countries, and there is no need for trade beyond NAFTA. | use the following data: US GDP at $14 trillion; Canada GDP at $1.2 trillion; Canadian exports as percent of GDP at 75 percent in 2011, with Ontario exports as percent of provincial GDP at 79 percent and British Columbia exports at 46 percent of provincial GDP. See Jeffrey A. Frankel, “Globalization and the Economy,” Kennedy School of Government NBER paper series 7868 (2000). See also Joseph S. Nye and John D. Donahue, eds., Governance in a Globalizing World (Washington: Brookings Institution, 2000). | International journal | Autumn 2012 | 967 || Emmanuel Brunet-Jailly | The following section examines the view that economic integration in the Canada-US border regions has been impeded by post-9//11 border policy. A HARDENED BORDER POST-9/11? Since 9/r1, an increased emphasis on border security and surveillance in American policy suggests that the Canada-US border has hardened; indeed, some scholars have argued that securitization has had a huge impact on trade and is now influencing all policy arenas that are concerned with or establish borderland policies. A great deal of evidence suggests that current practices—the 2001 Smart Border Declaration (SBD) between Canada and the US, as well as the Security and Prosperity Partnership (SPP) of North America—are consistent with many past North American agreements in the areas of trade, free trade, energy, water management, and the military. North American bilateral cooperation was exemplified by the reciprocity treaty of 1854, the 1902 and 1909 agreements on water issues, the negotiated (but failed) free trade agreements of 1911 and 1948, the successful 1965 Autopact, and the 1988 FTA and subsequent NAFTA. Provinces and states (and even communities) that straddle the border have signed agreements in diverse policy areas as well. Today, in the areas of defence and security alone, more than 2,500 agreements link Canada and the US. The Permanent Joint Board on Defence, which was established in 1940, and the 1957 North American Aerospace Defense (NORAD) are good examples. SPP in turn has led to over 300 initiatives in areas of food, drugs, security and civil liberty, immigration, refugees, manufacturing, the environment, and public health. Although such agreements represent a long and well-established tradition of close cooperation between the two federal administrations and bureaucracies, agencies, and other lower level governments in various areas of public policy, the agreements have never led to any international institutional developments. Rather, they have established functional linkages of cooperation that rely on shared values of expertise and efficiency typical of the 1909 International Joint Commission (IJC), a particularly good example of functional cooperation. For almost a century, the IJC has cooperated daily on the management of shared waterways and the Great Lakes, its fifty staff administering twenty committees of American and Canadian experts in various domains of water and air quality. Is it remarkable, then, that after two centuries of close partnership and negotiations in a multitude of policy 12 See www.international.gc.ca. | 968 | Autumn 2012 | International Journal || Anew border? | areas, Canada and the US have never initiated agreements leading to the emergence of international institutions? Or is it that fundamentally peaceful relations and a common North American identity mean institutionalization is not warranted in North America? As Cris Shore argues, the specifics of the North American context are important to understanding this particular relationship, which contrasts so markedly with other examples of cooperation in the world, such as in the European Union, where powerful institutions hold together a varied polity. Canada and the US signed the SBD in 2001 and SPP in 2005 because these agreements conform to precedents in the security history of the two countries. The SBD was a federal level agreement that established broad goals for both Canada and the US. It set out four major themes of cooperation and 32 clear objectives, which were intended to secure flows of people, goods, and infrastructures, as well as increase coordination and information sharing. It also established clear policy objectives and suggested that public agencies collaboratively implement a common security policy. But rather than set up an agency of cooperation on security, the declaration directed Canada and the US to sign as many security-related agreements as possible, involving various federal, state/provincial, and municipal security agencies. The declaration focused particularly on greater cooperation in four sub-areas of customs, immigration, and security. While announcing the terms of the SBD, Canadian foreign affairs minister John Manley and director of US Homeland Security Governor Tom Ridge explained that secure flows of people and goods, secure infrastructure, and coordination and informatio-sharing are necessary because of the high volume of trade between the two countries. Both officials also underlined the importance of the smart technology component of the agreement. That most of those initiatives are taking place at all levels of government (local, regional, provincial/state, and international) is not surprising. Guiliano Zaccardelli, the former commissioner of the Royal Canadian Mounted Police (RCMP), had already promoted such a strategy as early as in the 1990s. He had argued that a progressive integration of law enforcement agencies at all levels of government would increase the effectiveness of strategies to combat crime. The Integrated Border Enforcement Team concept was tested in 1996 in the Vancouver-Seattle border region; it was successful, and the first results were introduced at the Canada-US Cross-Border Crime Forum 13 Cris Shore, Building Europe: The Cultural Politics of European Integration (London: Routledge, 2000). | Intemational Journal | Autumn 2012 | 969 || Emmanuel Brunet-jailly | in 1997. Since then, agencies have worked together to develop common protocols, and the SBD and SPP not only further enhanced those policy innovations, but also led to the implementation of border enforcement teams in fifteen regions straddling the Canada-US border. In the US, as of March 2003, the Department of Homeland Security had merged several agencies into a new single agency, the Bureau of Customs and Border Protection. The bureau includes custom services, border patrols, Immigration and Naturalization Service (INS) inspectors, and Department of Agriculture border inspectors, which involved a transfer of about 40,000 employees. During the previous year, 1,025 immigration inspectors and 2,050 border-patrol agents were hired, and the number of officers on the Canadian border increased to 560, before reaching 1,000 by the end of 2003. All border services were unified under one line of command in response to major criticism that past US border policies and procedures involved too many agencies. Today, Bureau of Customs and Border Protection officers graduate from the same school, where they train to become part of specialized airport inspection, anti-terrorism, and passenger-analysis units. The initial results of the 2005 SPP included border improvements, land pre-clearance measures, and joint port security exercises, many of which follow the 32-point action plan. The Obama administration has affirmed its commitment to continue past efforts in North American cooperation in meeting with neighbouring leaders but under a different approach from the SPP framework. How could Canada and the US negotiate and implement such ambitious policy responses to 9/11 while facing the post-9/11 economic slowdown and ongoing fear that the Canadian border was a possible point of entry for maleficent people? Indeed, in this context it is important to keep in mind that the Detroit-Windsor Tunnel is owned by both municipalities and carries about 13,000 vehicles, mostly cars, minivans, and small trucks; and the Ambassador Bridge (privately owned) links Detroit and Windsor to form the largest trade link in the world, with more than 4,000 cars and 10,000 trucks crossing daily, carrying goods worth more than $120 billion per year. Indeed, the cost of the border to carriers, manufacturers, and governments in terms of delays and compliance has been estimated by one survey to be between $7.5 billion and $13.2 billion annually. Estimates of costs related to transit time and uncertainty total $4 billion, and costs related to trade policy are estimated at $6.28 billion, making a mid-range total estimate of $10.3 | 970 | Auturnn 2012 | International journal || Anew border? | billion, or about 2.3 percent of all cross-border trade in 2004." Others have claimed that additional reporting, compliance, and delays add approximately $800 to the cost of every North American-produced vehicle and that the border “threatens to become the greatest non-tariff barrier the world has ever seen.” Massive investments in new scanning technologies, particularly large- scale X-ray imaging systems, have increased the capacity of ports of entry to check seaport containers, as well as trains and trucks crossing land border gates. In 2001 only 7.6 percent of all containers were inspected; in 2003 12.1 percent were inspected. Container inspection rose in each area of transportation in that two-year period from nine to 22.6 percent of train containers, two percent to 5.2 percent of sea containers, and 10.3 percent to 15.1 percent of truck containers." Interestingly, the program is still developing common security standards to identify, pre-screen, and label containers when secured. Agents work side-by-side but cannot act in each other's country, where they are only working in advisory capacities. Behind issues of sovereignty protection there are discussions relating security norms to competitiveness, where operators are concerned with potential loss of business. Trains are also inspected. The Vehicle and Cargo Inspection System program is in place on seven rail crossings on the US side and one on the Canadian side.” Another example of this partnership is the Free and Secure Trade program (FAST), which allows American and Canadian firms to apply for security pre-clearances. After meeting specific security criteria, firms and their truck drivers are allowed to cross the border without stopping (as their information is transmitted by a transponder). As a result, FAST facilitates movementalong a secure supply chain for importers, exporters, commercial carriers, and truck drivers on both sides of the border, which, in turn, 14 George Jackson, Douglas Robideaux, and John Taylor, “The U.S.-Canada Border: Cost Impacts, Causes, and Short to Long Term Management Options,” wwwhwa. dot.gov. 15 Coalition for Secure and Trade-Efficient Borders, “Rethinking Our Borders: A New North American Partnership,” www.cme-mec.ca. 16 Robert Bonner, “Hong Kong Trade and Development Council report on the testimony of Robert Bonner before the Senate Committee on Transportation and Security Initiative,” www.info.hktdc.com. 17 US Customs and Border Protection (CBP), “Customs-Trade Partnership Against Terrorism: A Year in Review, 31 January 2008” and CBP, “Free and Secure Trade Factsheet,” www.customs.gov. | International journal | Autumn 2012 | 97! || Emmanuel Brunet-Jailly | allows federal agencies to focus their inspections on non-pre-cleared traffic and goods. FAST brings together the US Bureau of Customs and Border Protection's customs-trade partnership against terrorism and the Canadian Border Security Agency's partners in protection program, and it audits and certifies businesses.'* Since 2003, Customs and Border Protection has reviewed and validated over 6,900 businesses and nearly 90,000 truckers that are part of cross-border supply chains. To improve access to the FAST lanes, a new bridge is to be constructed at the Detroit River International Crossing south of the Ambassador Bridge between Zug Island on the Michigan shore and Brighton Beach, Windsor. The plan to construct the bridge was approved in 2009. The Detroit River International Crossing proposal is supported by the Canadian government, which believes the bridge should not be privately held. To this end, former Canadian transport minister John Baird offered to loan the state of Michigan $550 million to fund its share of the new bridge, the total cost of which is expected to be $5.3 billion. The Michigan House of Representatives approved the proposal on 27 May 2010, and the bill is awaiting Michigan Senate consideration. Meanwhile, the owner of the Ambassador Bridge has brought a NAFTA investor-state dispute over his contention that the proposed rival bridge would divert traffic (and tolls) from his bridge; the issue is yet unresolved." Other programs extend to individuals who travel frequently across the border. NEXUS, for instance, allows pre-approved individuals to cross the border with a “smart card,” which is a valid form of identification, according to the Western Hemisphere Travel Initiative. Six ports of entry have the appropriate equipment for NEXUS at Blaine, Washington (with three ports of entry); Buffalo, New York; Detroit, Michigan; and Port Huron, Michigan. NEXUS is especially important in minimizing the disruption of cross-border trade in services, which relies on the free movement of skilled labour. In 2009 NEXUS had 265,000 participants and was operational in 16 high-volume border land crossings, eight airports in Canada, and 33 marine crossings. Nevertheless, the expanded useof NEXUS orsimilar forms ofpreclearance remains a contentious issue. Although a jointly commissioned study has 18 CBP, “Free and Secure Trade Factsheet,” www.customs.gov. 19 “Ottawa’s $550 Million Loan Offer for New Bridge Launches War of Words in Michigan,” Globe and Mail,29 April 2010; Bill Shea, “Bridge Q&A: Your DRIC Questions (Mostly) Answered,” Crain’s Detroit Business, 30 April 2010, www.crainsdetroit.com. | 972 | Autumn 2012 | International journal. || Anew border? | detailed the operational benefits of cross-border operations, several legal and institutional issues remain unresolved, including land ownership where preclearance occurs away from the border line and the enforcement powers, such as the ability to carry firearms, of preclearance agents. Negotiations to implement a pilot program at the Peace Bridge crossing at Buffalo-Fort Erie broke down in April 2007. A 2008 US Government Accountability Office report cited disagreements over arrest authority, fingerprinting practices, and the right of individuals to withdraw an application to enter the US while at the preclearance station. Travel by US residents to Canada appears to be particularly adversely affected by these new regulations. The last SPP summit was in Guadalajara in 2009. The Obama administration has affirmed its commitment to continue past efforts on North American cooperation, but not within the SPP framework. One aspect of this new framework was announced on 4 February 2011, when Prime Minister Harper and President Obama met to launch two new initiatives, both of which exclude Mexico. The first initiative is the US-Canada Regulatory Cooperation Council; the second is a joint declaration titled, “Beyond the border: A shared vision for perimeter security and economic competitiveness,” listing principles and objectives for future actions.*! ‘Together, these initiatives have been called the “Washington Declaration.” The Washington Declaration and other policies implemented by the US and Canada to address border security and efficiency since 9/11 are in line with policies successfully implemented for over a century. These policies address narrowly-focused issues and are developed and implemented with limited coordination. Indeed, when security issues are at stake, the traditional North American community consists of only Canada and the US, and the exemplary institutional model is NORAD. It is clear that post-9/11 policies have made the border more secure, but does that mean that the border has hardened? Prior to 9/11 the border was not seamless—it was understaffed on the US side and facing increasing trade. Post-9/t11, for a few weeks and before the SBD, the border functioned suboptimally. But once the SBD was implemented, the border became very efficient. While trade remained stable or dropped, in particular during the 2008 economic crisis, economic integration increased, and the cost of border crossings decreased significantly. In other words, post-9/11 border security 20 “U.S. Tourists Staying Away from Canada,” Bangor Daily News, April 6, 2010; International Association of Amusement Parks and Attractions, “Rules of the Road,” www.iaapa.org. 21 See www.whitehouse.gov. | Intemational Journal | Autumn 2012 | 973 || Emmanuel Brunet-Jailly | policies became much more effective to the point of reducing freight cost across the boundary line. BORDER RELATIONS DEMONSTRATE ONGOING FRIENDSHIP Following 9/11, North American economic integration and interdependence were subjects of debate in Canada and the US. In the US attention was focused on the security of the Canadian border; in Canada tensions between economic integration with the US and national sovereignty were running themes. Despite this renewed attention to the Canada-US border, the border security policies that emerged post-9/11 are typical of the approaches found in all agreements between Canada and the US of the 2oth century in that policies focused on specific border functions do not spill over into overlapping policy arenas. These policies do not question the fundamental principles established by Westphalia. Security policies are visible and target specific functions necessary to trade. Indeed, Canada-US agreements focus on tackling security matters from the narrower perspective of potential terrorist threats and where security is not broadly understood as potentially multi-sectoral but as primarily associated with criminal activities. These are policies that need political visibility but whose effectiveness is continuously in question. The recent Washington Declaration will not change these fundamental assumptions, even if it is premised on the creation and implementation of a secure perimeter around Canada and the US. Such a perimeter, along with increased security policy alignment and alignment between Canadian and US local, provincial, and state officials and the respective federal governments, will be the focus of policymakers. Common policy addressing security and boundary concerns may move away from the Canada-US border to the large influx of goods and people to North America, which in turn will lead to new continental imperatives. 22 Steven Globerman and Paul Storer, “Geographic and Temporal Variations in Freight Costs for U.S. Imports from Canada,” Western Washington University Border Policy Research Institute, www.wwu.edu. 23 The 1648 Peace of Westphalia established the modern state system, in which states are recognized as legitimate members of an intemational community of states and have exclusive rights to exercise violence in their internal affairs. | 974 | Autumn 2012 | International Journal |