How cross-border trade works when the border is closed

TVO.org speaks with border expert Bill Anderson about supply chains, economic impacts — and what we could do instead of opening the border
By Mary Baxter - Published on Aug 04, 2020
Fifteen to 20 per cent of the trade between Canada and the United States goes across the Ambassador Bridge in Windsor. (iStock.com/Steven_Kriemadis)

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In July, Bill Anderson, Ontario Research Chair in cross-border transportation policy at the University of Windsor, predicted that the United States-Canada border would remain closed for a while longer, telling the London Free Press, “It’s hard to imagine the U.S. administration engaging the Prime Minister on this until the next calendar year.”

And that says Anderson, who is also the director of the Cross-Border Institute in Windsor, brings a growing risk of negative economic impacts — despite the fact that the Canadian and U.S. governments are allowing essential crossings to continue. 

Fifteen to 20 per cent of the trade between Canada and the United States goes across the Ambassador Bridge in Windsor; the border crossing is the third most important trade port in the United States

TVO.org spoke with Anderson about the border closure’s impact on cross-border trade — and how to mitigate it. 

TVO.org: During the COVID-19 pandemic, what have you been looking at? 

Anderson: We’ve been very interested in how this [border shutdown] affects the movement of goods and people across the border, and the agreement made between the United States and Canada on March 18 set the rules for that. Under that agreement, the movement of goods is almost unimpaired — we have pretty close to the normal amount of truck traffic going back and forth. 

That’s really important because of industrial supply chains. It would have been impossible to get the automotive plants in Ontario back up and running if not for the ability to keep those trucks going back and forth. 

But also, there’s movement of things like groceries. Between 10 and 15 per cent of what crosses the border by value across the Detroit River is food. There would be empty grocery-store shelves otherwise. Pharmaceuticals, that’s a big category, too. 

But people moving back and forth has been very constrained. 

TVO.org: Who can cross the border right now?

Anderson: The only people able to cross the border are essential workers [workers in health care, essential services and infrastructure]. 

There are other people for whom it’s very important to cross the border — we don’t know exactly, but probably something like 50 per cent — for cross-border shopping, going to sporting events, going to do things with friends on the other side. 

But a lot of crossing has to do with business — for example, manufacturing machinery is a big industry in Ontario. Much of it gets installed in the United States, and people need to go back and forth in order to maintain it, to train people on it, and to install it. And, then, in the automotive industry, you have auto parts crossing the border to go to facilities. Those people are having a lot of trouble because most of their cross-border activity is constrained. 

TVO.org: Why do you think there is going to be a negative economic impact as long as the border remains closed? 

Anderson: In the short run, because the supply chains are in place, and all the goods are moving, it appears that there isn’t much of a problem. But every truck that’s going back and forth across the border is the outcome of an agreement or contractual relationship that was established in the past. Establishing those relationships requires a lot of face-to-face contact.  

If there’s enough of that type of problem, then, in principle, it could be some of that cross-border automotive trade could decline as a result of there being less familiarity and trust in these relationships. 

So the question becomes, are there intermediate things that you can do short of opening the border?  

TVO.org: Are you seeing any movement by federal governments to introduce intermediate measures? 

Anderson: The agreement, which was originally for one month, keeps getting extended for another month without any changes. I’m not hearing any information to encourage me to think that we’re going to have a plan in place to have an intermediate easing of restrictions in the short term. My fear is not that this won’t happen this month or next month. My fear is that we could stay in the situation we’re in right now for a year or longer.

This would eventually cause significant economic damage. And the most optimistic prediction is that we’re going to see some big changes in early 2021. And that’s pretty optimistic.

TVO.org: What would those intermediate measures look like? 

Anderson: A lot of it is discussions about the different types of tests available and how they might be used. People are doing testing at airports. Problem is, it’s difficult to do testing at a land border. You could never turn the Canada-U.S. border into a drive-thru test centre. 

You would need ways to get test results confirmed so that you would be able to demonstrate that you’ve got a recent negative test result. 

None of this is easy. There has to be agreement between United States and Canada regarding which tests are acceptable. I think if we don’t start thinking about it now, then we could end up in a bad spot. You have to live in a place like Windsor to know how interconnected the two sides of the border are. I’m not even worrying about tourism and our general lifestyle here. I’m just thinking about keeping people employed and that cross-border trade going.

TVO.org: What could this situation mean for the Gordie Howe International Bridge? 

Anderson: The opening is scheduled for 2024, so one would hope that we will no longer be in this crisis. But it may be that there’s less business there by then. That’s why the Gordie Howe project is important: it’s telling people that cross-border supply chains are going to have infrastructure to manage those movements in the future.

The fear, from Ontario’s perspective, is that, if it becomes difficult to run supply chains across the border, then you would do it on one side or the other. And, since the market is in the United States, you should do it there. 

Having said that, the most important thing is that federal governments kept the trucks flowing. Had the trucks stopped flowing — I think the economic implications would have been brutal.

This interview has been condensed and edited for length and clarity.

This is one in a series of stories about issues affecting southwestern Ontario. It's brought to you with the assistance of faculty and students from Western University’s Faculty of Information and Media Studies.

Ontario Hubs are made possible by the Barry and Laurie Green Family Charitable Trust & Goldie Feldman.

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