Customs StopThe phrase “thickening of the border” equates with increased regulations and costs, which result in difficulties or slow-downs at the border such that goods and people move at the pace of molasses. Border wait times increase as new border charges are paid and shipments are inspected and border officers assess risks.  Any thickening of the border harms businesses on both sides of the Canada-United States border and ultimately increases the cost of goods for consumers.

Canadian businesses (e.g., manufacturers, shippers and truckers moving goods across the border) are rightly concerned that the Trump Administration, or the U.S Department of Homeland Security / U.S. Customs and Border Protection (“USCBP”) will implement new screening procedures at the Canada-US border that will slow down safe and secure trade.  For example, USCBP had revoked FAST (Fast and Secure Trade) memberships of some Canadian truck drivers with a connection to one of the 7 entry ban countries (Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen) who were vetted for entry into the FAST.  This means that those truckers will not be able to use the FAST truck lanes at the border and will have to use the regular lanes, which results in a longer wait time at the border. When there are more non-FAST trucks lining up at the border, this slows down passage for the FAST trucks because the infrastructure at the border creates a bottleneck at the divergence point.

While the FAST truck measure affects a limited number of trucks, it is the tip of the iceberg. If additional screening measures are implemented, trade at the border will slow.  Since 2001, Canada and the United States have worked hard at ensuring bilateral trade moves securely and quickly.  For example, Canada and the United States have been actively pursuing a two-pronged initiative in the form of the Beyond the Border Action Plan and the Regulatory Cooperation Council Action Plan.  See also the U.S-Canada Regulatory Cooperation Council website.

Further, if any border adjustment tax is implemented and must be collected at the border, trade will slow significantly in the future – especially if the taxes must be collected at the border at the time of clearance of the goods.  If the rules of origin in NAFTA are also changed so that many goods that were previously duty-free are now subject to duties, there will be a thickening of the border as paperwork concerning duties payable is filed and duties are paid.  If new inspection charges are implemented and inspections increased, the border-wait times will increase as more trucks for inspection fill the available spots at the border.

What can Canadian companies do to limit the effects of “thickening at the border”?

There is little that Canadian companies can do to stop the Trump Administration and USCBP from implementing new screening measures, regulations and fees.  However, Canadian companies can take a few steps that may hopefully reduce the effects of new border measures.

  1. Sign up for C-TPAT (Customs–Trade Partnership Against Terrorism), which is a voluntary, joint U.S. government-business partnership to help add to supply chain and increase border security.
  2. Sign up for PIP (Partners in Protection), which is a voluntary, joint Canadian government-business partnership to help add to supply chain and increase border security. For more information about PIP, see Canada’s Partners in Protection Program and Join Canada’s Partners in Protection Program.
  3. Individuals who travel often for business should apply for the NEXUS Program.
  4. Sign up for FAST (Fast and Secure Trade), which facilitates cross border trade by pre-approved and security-cleared carriers, importers and drivers.
  5. Sign up for EDI (Electronic Data Interchange) in Canada and the United States, which allows cargo reporting, release, entry and accounting to occur electronically.
  6. Inform Canada of U.S. regulations that create bottlenecks at the Canada-US border.  Canada will be discussing improvements to NAFTA (also known as the renegotiation of NAFTA). The Trump Administration is also reducing regulatory borders, This presents a great opportunity to reduce regulations that slow bilateral trade.
  7. Conduct an internal customs compliance audit to ensure that your customs paperwork is accurate. This includes reviewing H.S. Codes used, certificates of origin and valuation.
  8. Drivers should “know their load”.  Sometimes USCBP has questions and the 10 minutes it takes for a driver to ask questions about the goods being transported can save hours at the border.  Also, if the driver is carrying a load with multiple goods, knowing where goods are located in the truck can save time during the inspection process if the border officers are only interested in certain goods.  Being able to inform the border officers of the location of the goods at issue may save hours during the inspection.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.