Terror fallout is punishing Canada’s economy

The Washington Post

NIAGARA FALLS, Ontario — Canada’s economy was struggling well before Sept. 11, but economists now warn the attacks on the United States have increased the likelihood of a recession. Their only question is how long it will last.

In the weeks following the attack, the Canadian dollar plunged to a record low of 63.34 U.S. cents, and consumer confidence fell. Automotive and lumber plants shut down, hotels let workers go and Air Canada laid off 5,000 people. Economists say more bad news may be coming as delays at the 4,000-mile border between the United States and Canada have hurt exports.

"A large part of the Canadian economy is connected to the United States market either directly or indirectly, so any business that has shipments going across the border in either direction is obviously being affected," said David Stewart-Patterson, senior vice president of the Business Council on National Issues.

Canada Customs and Revenue reports no delays at most border crossings. But at others, heightened security, including random checks, has slowed the movement of trucks. At some points, delays can last several hours and truckers without the right paperwork can be turned away.

"It’s tying up people’s freight at the border. Money is idling," said Darrel LaPoint, a truck driver who was sitting in a commercial vehicle processing center on the Peace Bridge between Erie, Ontario, and Buffalo, N.Y. "One day I spent 13 hours because they closed the border. If they close the border, you can get here and there will be a thousand trucks backed up. I get paid when I’m driving. I don’t get paid to sit at the border."

LaPoint, who was delivering boxes of french fries to Burger King, said one inspector climbed into his refrigerated truck, where the temperature was 15 degrees below zero, crawled to the front of the stack of boxes and poked a hole in a couple of them to look inside. "It can be a real hassle if you don’t have the paperwork," he said.

Other truckers said they don’t mind the wait. "I think it’s necessary to protect the country," said Kendrick Hull, who has been driving since 1991. "We are dealing with evil like no other enemy we fought before. I’ll lose money if I have to idle the truck, but they have to protect the country."

Fluid movement at the Canada-U.S. border has been essential for trade, especially since the North American Free Trade Agreement went into effect in 1994. Canada is the United States’ largest trading partner. More than $1 billion in goods move across the border each day, and 200 million people cross the border each year.

But as the U.S. economy slides, the volume of traffic coming into or going out of Canada has dropped. Canadian manufacturing production has fallen 5 percent since January. "This is certainly going to deepen that recession," said Jayson Myers, senior vice president and chief economist for the Canadian Manufacturers and Exporters Association.

Canadian officials are trying to decide how to increase border security without creating longer traffic lines. Business leaders are calling for the governments to "pre-clear" shipments that do not pose a security threat somewhere before the border. They say the lives of businesses depend on it.

"There are literally — and I’m not overstating this — there are literally millions of jobs dependent upon this bilateral trading relationship continuing to be strong and healthy," said Michael Hurst, the mayor of Windsor, Ontario, across from Detroit. "We can’t sacrifice that. There has to be security, there’s no question about that, but there has to be lots of focus and lots of attention on the issue of economic security in both Canada and the United States."

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