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Saturday, April 15, 2006

Barriers to Entry: Terrorism Tariffs

For people who cross the U.S.-Canadian border as tourists or to purchase goods and services, and for manufacturers who ship across the border, the new rule requiring a passport that goes into effect in 2007 and other security measures will act like a tariff due to increased crossing times and the time and monetary cost of obtaining a passport. Not everyone is happy with the reduction in trade such 'terrorism tariffs' are expected to bring about:

A Tightening Border Has Canadians Worried, by Ian Austen, NY Times: As theater, the "Oh Canada Eh?" dinner show and the Shaw Festival, whose current season includes an Ibsen play, have little in common. But ... the two theaters have the same worries about a relatively recent American law that will require anyone crossing the United States-Canadian border to show a passport or a still undetermined equivalent.

"It's become the war on tourism, not the war on terrorism," said J. Ross S. Robinson, the ... owner of the "Oh Canada Eh?" revue. He said the new rules had already led to cancellations from the United States even though they do not go into effect for land travelers until the end of 2007.

Nor are owners of tourist destinations the only critics of the new rules... Manufacturers who ship parts and finished products across the border worry about further slowdowns at already congested crossings. While museums, professional sports teams and store owners in Western New York all rely on Canadian visitors ..., it appears that the Canadian tourism industry will bear the brunt of the new regulations.

At the moment, a smaller percentage of Americans (about 24 percent) than Canadians (about 39 percent) hold passports. ... Mr. Robinson said he was concerned that relatively few people in the United States would spend the $97 and complete the passport paperwork simply to travel to Canada. ... the show relies heavily on bus tour operators for business. Such travelers, Mr. Robinson said, are often elderly and price conscious. "A huge majority don't have passports and won't get them," ... "We'll never replace the loss of a large number of Americans with tourists from Australia or England."

While the legislation allows the American government to create a new border crossing card, it is expected to cost about $50, involve paperwork similar to a passport and, in the view of Mr. Robinson and others, be equally unattractive to casual travelers.

While there is less of a panic at the Shaw Festival, in Niagara-on-the-Lake, a prosperous tourist town, ... a spokeswoman ... said there was nevertheless concern. .... Ms. Yazbeck said the festival's research showed that Americans who are repeat visitors either own a passport or have the financial means and inclination to acquire one. But, she said, the increasing tendency of Americans to make last-minute travel plans through the Internet does not fit well with a passport requirement. ...

[This week, the Vancouver-based Jim Patterson Group, citing the new regulations, canceled plans for a new aquarium that would cost 100 million Canadian dollars. The aquarium was to be operated by its Ripley Entertainment division.]

Jim Bradley, Ontario's minister of tourism, has been emphasizing ... that Canadians made about 36 million nonbusiness visits to the United States in 2004, the equivalent of more than one visit a year by every single resident of that country, while American trips north totaled 34 million. "So much of this is done on a casual basis," Mr. Bradley said. "We're going to see a huge decline on both sides of the border."

Representative Don Manzullo, Republican of Illinois..., said he was concerned ... "We're taking our closest trading partner and slapping them in the face," Mr. Manzullo said. "It's a constant fight down here not to treat Canadians like terrorists."

Although many truck drivers now carry special border crossing cards, Perrin Beatty, the president of Canadian Manufacturers and Exporters, ... is concerned that tighter border controls would disrupt the tight parts delivery schedules now common in factories. "We have visions of severe bottlenecks at the border," Mr. Beatty said. ...

But Mr. Beatty, a former Conservative member of Canada's Parliament and cabinet, said that he objected to the American plan for more than business reasons. "Do we want to put barriers between our two people that prevent them from getting to know each other?" he said. "I would think post-Sept. 11th, building North American unity should be priority No. 1."

    Posted by on Saturday, April 15, 2006 at 12:14 AM in Economics, International Trade, Policy, Regulation, Terrorism | Permalink  TrackBack (0)  Comments (5)

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