Prime Minister Paul Martin’s visit to the Oval Office this week provides him with a welcome opportunity to confront less-publicized trade barriers between Canada and the United States. While the Canada-US Free Trade Agreement and NAFTA significantly reduced tariffs and quotas, trade barriers that are neither tariffs nor quotas continue to plague trade. These barriers appear in the form of an ever-changing menu of regulations and other government imposed obstacles that confront exporters on both sides of the border every day.

A lack of uniform regulations or commonly accepted standards across North America has led to a fragmented system that is confusing for exporters and can be easily manipulated by governments in a discriminatory fashion. Under the guise of regulation, governments can intentionally or unintentionally favour a domestic industry over a foreign one.

Problems at the border also continue to cause headaches for exporters. Cumbersome customs inspections inflict damage on firms who rely on just-in-time delivery. Rules of origin requirements add administrative costs on exporters while long border delays cause product deterioration, unpredictability and increase transportation costs.

Recently a new wave of federal, state, and municipal protectionist procurement laws have been introduced in the United States. Legislative initiatives such as the Defending American Jobs Act and the Dodd Amendment would force firms to abide with “buy American” provisions if they wish to do business with the federal government. While these pieces of legislation are generally aimed at preventing government contractors from “outsourcing” work to China or India, proposed “buy American” procurement policies could threaten businesses operating in Canada.

Government procurement policies are often designed to help domestic firms and effectively eliminate lower-cost imports or make foreign bids uncompetitive in government bidding. Policies such as the Berry Amendment, which requires the US Defense Department to buy certain components made exclusively in the United States, have been on the books for quite some time. While these measures are popular with politically connected labour unions and businesses, especially during a congressional and Presidential election year, the added cost of protectionism is ultimately born by taxpayers and results in higher taxes.

A recent Fraser Institute survey of Canadian exporters to the United States revealed that these non-tariff, non-quota trade barriers constitute an unseen wall for exporters. Of those who responded to the survey, 72 percent reported facing so-called unofficial trade barriers in 2002-2003. This is a worrisome trend that underlines why Canada’s close trading relationship with the United States needs to be carefully monitored and protected.

Unfortunately, relations between the world’s greatest bilateral trading partners were marred last year by disagreements over the war in Iraq and by the ugly remarks of certain senior government officials and Canadian Parliamentarians. Ninety-six percent of respondents to the Fraser Institute trade survey in 2003 believed that Canada-US relations had deteriorated in the past year. Of those businesses who felt that relations had suffered, 67 percent believed that the deterioration had negatively affected their ability to sell in the US market.

While protectionist sentiment still lurks in some corners of the Canadian government, free trade with the United States is viewed favourably by the majority of Canadians and by most federal policy-makers. It is not difficult to see why. Exports in goods and services to the United States from Canada have more than tripled since the signing of the Free Trade Agreement in 1989. More than ever, the livelihood of workers in regions across Canada relies on dependable access to the American market.

A number of creative solutions have been suggested by leading Canadian research organizations and business groups and should be seriously examined. Ideas such as harmonization of regulatory standards, a North American customs union and broadening the scope of NAFTA could successfully combat non-tariff, non-quota trade barriers.

Canadians have seen how high profile trade disputes such as softwood lumber can hurt communities and businesses. However, non-tariff, non-quota trade barriers also place Canadians exporters at a competitive disadvantage. While he is in Washington, the Prime Minister should actively seek to root out these remaining trade barriers between Canada and the United States.