Economy & Business

Remove Cross-Border Trade Obstacles between Canada and the U.S.

(Photo: Marian Vejcik/Dreamstime)
Citizens of the two nations shouldn’t have to undergo months of paperwork to sell products in each other’s markets.

Last weekend I attended the Calgary Comic & Entertainment Expo, one of this continent’s biggest geek-culture conventions and a bustling hub of North American commerce. Canadians and Americans mingled side by side selling books, T-shirts, toys, crafts, and other assorted nerd paraphernalia in a milieu resembling a bazaar on some colorful Star Wars planet.

Unfortunately, since the show took place in Canada, many — maybe even most — of the American vendors were there illegally. Not to pass judgment, of course — a few weeks prior I had attended the Emerald City Comicon in Seattle, and that thing was swarming with illegally present Canadians.

To be clear, we’re not talking about illegal immigrants. At both Calgary and Seattle, the foreigners had merely crossed the border to sell their wares, then promptly returned home when the festivities ended. Yet in year 25 of NAFTA, casually crossing the border to sell things remains basically impossible to do legally. This provides a revealing illustration of why many small-time entrepreneurs in Canada and the United States will have a hard time mustering tears if Donald Trump shreds a continental free-trade deal that’s never done much for them.

In practice, an American or a Canadian who wishes to cross the border for the purpose of engaging in some casual capitalism at a foreign market — say, a band performing at a bar, a magician making balloon animals at a county fair, or a guy looking to hawk old records at a flea market — will often simply lie (explicitly or through omission) his way across the line, faking vacation plans and praying that his car or suitcases go unsearched.

Getting caught has low odds but can still be incredibly risky. The punishment for border-crossing on false pretenses can be as severe as a lifetime travel ban. Yet when you speak to people who do this routinely, they’ll tell you it’s still less stressful than complying with all the expected legal procedures and protocols.

A foreign sole proprietor who wants to cross the border — in either direction — must first complete stupefying paperwork at the entry point, documenting every product he has any intention of selling. Then he must calculate and pay any applicable duties and taxes. That’s only half the hassle, mind you, given that the proprietor must also receive bureaucratic approval for himself, through a costly foreign-worker visa sought months in advance. And even then, neither country really offers a visa that can be described as appropriate for this purpose. The officials with whom I spoke suggested either incorporating a business in the destination country or getting a local business to hire you as an employee. One could then use that as grounds to petition for a foreign-worker permit — for a weekend.

Whatever this status quo is, an open market it isn’t.

Canada–U.S. free trade — which predates NAFTA — has undeniably provided convenience for some. If you’re the sales department of a large North American corporation with an army of trade lawyers, it’s easy to get crates of your stuff over the border and onto supermarket shelves. If you’re a powerful lobby such as dairy or lumber, politicians will risk trade wars to make your life easier. But if you’re just some guy who made stuff in your garage you think Americans or Canadians might like to buy: tough luck.

Both President Trump and Prime Minister Justin Trudeau have said they’re ready to modernize NAFTA. If it’s truly on the table, they should consider two ideas.

The first is ditching NAFTA altogether in favor of three bilateral trade deals — Canada–America, America–Mexico, and Canada–Mexico. American problems with Mexican illegal labor, and larger cultural anxieties about America’s growing Hispanic population, are concerns Canadian interests can’t afford to be tied to. The sooner American policymakers conceptualize a trade deal with Canada as just that — trade with a single, friendly, familiar nation, and not a grand or ominous “continent” — the better.

The second is the establishment of a common market zone allowing Canadians and Americans to freely cross the border to engage in short-term commercial activities. They should pay applicable national and local taxes, and comply with other regulations, but there’s no reason that selling a few comic books or performing a simple service such as playing a concert should require a months-long visa application and mounds of paperwork.

That Canadians and Americans do not enjoy rights of movement and commerce in each other’s country, the way Australians and New Zealanders do, is one of the great missed opportunities of history.

To prevent such an arrangement from becoming a backdoor scheme to shuffle around cheap labor, its protections should be limited to citizens. Even then, a length-of-naturalization standard might be desirable — say, five or ten years as a citizen. Assuming that Canada’s naturalization process holds some credibility in American eyes, that should prove sufficient for most security concerns, and it wouldn’t require more than a passport to prove.

That Canadians and Americans do not enjoy rights of movement and commerce in each other’s country, the way Australians and New Zealanders do, is one of the great missed opportunities of history. Our two nations are not foreign places divided by suspicion and resentment, but partners united by deep bonds we undervalue at our peril.

Today, many young North American entrepreneurs, whether in Calgary, Seattle, or elsewhere, begin their business careers by learning that entering a barely foreign market entails a slog of counterintuitive hassles seemingly designed to do everything but encourage commerce. Continuing this status quo is an embarrassment to the principles of both economies.

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