February 7, 2011 / 6:16 PM / in 7 years

Canada-U.S. border deal seen far from certain

OTTAWA (Reuters) - Swift action is needed to put meat on the bones of a framework border-security agreement announced by President Barack Obama and Canadian Prime Minister Stephen Harper, Canadian business analysts said on Monday.

But whether a final agreement on a “perimeter” security plan will ever be reached remains an open question, at least in Canada, where tightening ties with the United States has always been a sensitive issue.

Friday’s announcement at the White House envisages creating a more unified and stronger security at the North American perimeter, while making it easier to trade and travel between the two countries, inside that perimeter.

The problem for North American business involves longer waits at the border and also the high cost of compliance with security regulations enacted after the September 11, 2001, attacks.

“It’s not only how many minutes it takes to cross the border but it’s all this compliance burden and data reporting before the truck even leaves the warehouse to get to the border,” said Birgit Matthiesen, U.S. specialist for the Canadian Manufacturers & Exporters lobby group.

She said “the time was more than ripe” for relief because of a rising Canadian dollar and competition from what she called a tsunami of imports from Asia. The two countries have traditionally enjoyed the world’s largest trading relationship, worth well over $1 billion a day.

Obama and Harper agreed to set up a working group that would report to them “in the coming months” and then again on an annual basis.

But Harper, who leads a minority Conservative government, could face an election at any time and these negotiations could well figure prominently in the campaign.

Though Harper’s Conservatives lead in the polls, the possibility of him being replaced also means he might not be around to push legislation through Parliament.

Liberal pundit Warren Kinsella recently suggested the deal could resurrect his party’s campaign strategy of 1988, when the Liberals warned that the Conservatives would erase the national border with the Canada-U.S. Free Trade Agreement.

“That is the potential of this secret deal to do, and that is something that Liberals and New Democrats, I think, would benefit from and ... Stephen Harper’s very nervous about,” Kinsella told the CTV television program Question Period on Sunday.

How hard the Liberals press this line of argument is uncertain, since they did not win them the 1988 election, but Kinsella said that if the campaign had gone on longer it would have tipped the balance.

Politicians have also raised concerns about the potential for a more open Canada to be pressed to adopt stringent U.S. security rules and thus lose some of its sovereignty.

Opposition parties are already attacking Harper for new corporate tax cuts, which he argues will stimulate investment and job creation.

The opposition says he is just a friend of big business and Canada can’t afford tax cuts now as it recovers from the recession and faces a record-high federal deficit.

The Obama-Harper declaration gives only broad-brush outlines of how a co-ordinated security deal would facilitate trade, referring for example to “harmonizing existing programs and automating processes at the land border.”

Walid Hejazi, a business analyst at Toronto’s Rotman School of Management, said the regulatory burden is so high to be able to trade duty-free across the border under the North American Free Trade Agreement that many companies find it cheaper to bypass NAFTA and pay the duties instead.

“The reason is these small companies that export into the U.S. have to prove they comply with all kinds of rules,” he said. “Anything that would make it easier for goods to cross the border would be really helpful to Canadian companies.”

Editing by Rob Wilson

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