Facing A Border Conflict

May 15, 2006
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LANSING — Michigan businesses became a bit more outgoing last year, as the amount of products exported by companies in the state rose by 5.6 percent over 2004, to $37.6 billion.

According to the Michigan Economic Development Corp., the agency that tracks export numbers, that 2005 sales figure made the state the fifth-largest exporting state in the nation. Only outgoing sales from Texas, California, New York and Washington topped those from Michigan.

The MEDC added that Michigan led the nation in exporting vehicles and parts last year, recording $14.8 billion worth of sales in that category, which accounted for 20 percent of all U.S. exports in that grouping.

Canada continued to be Michigan’s strongest trading partner, as the latest available figures showed that companies in the state sold 8.5 percent more goods to Canada in 2004 than in 2003. Topping that 2004 list of $21.5 billion in sales to Canada were vehicles and parts at $10.1 billion. Industrial machinery and computers followed at $3.9 billion, and fuel and oil sales were third at $1.5 billion.

Two-way trade between Michigan and Canada totaled $70 billion in 2004, up 8 percent from 2003. And a study conducted in 2003 by the Canadian Embassy revealed that trade with Canada supported 174,000 jobs in Michigan.

But will that trade continue to grow two years from now, when pending federal legislation, part of the “war against terror,” would require travelers to carry passports to go to and from Michigan and Ontario, the state’s largest trading province?

Gov. Jennifer Granholm and Ontario Premier Dalton McGunity expressed similar concerns about what effect a passport law might have on business and tourism in a jointly-written letter late last month to President George W. Bush and Canadian Prime Minister Stephen Harper.

“This new requirement will have potentially damaging impacts on our workforce, economy, health care system and tourism. Border travel is vital to the economic health of Michigan and Ontario and emblematic of the long-standing bonds linking the people of the Great Lakes region,” read the letter.

Granholm and McGunity said that 31.5 million Canadians visited the U.S. in 2004 and spent $7.7 billion during those trips, while 34.3 million U.S. citizens crossed the border into Canada, with their travel worth $10 billion there.

“A passport requirement would significantly reduce those travel volumes, with particular impact on same-day and spontaneous travel,” they wrote.

They added that requiring passports would likely hurt trade between two of North America’s most prominent automobile manufacturing locales.

“We are also concerned that the additional time involved in scrutinizing documentation at the border will create significant traffic backlogs,” read the letter. “Delays at the border may impact commercial truck traffic on which the cross-border manufacturing economy of the Great Lakes region is so dependent.”

Granholm and McGunity suggested the proposed starting date of the legislation — Jan. 1, 2008 — be extended, and that both nations work toward creating a more “friendly alternative” to a passport system.

They also requested a cost-benefit analysis by the Department of Homeland Security to determine the economic impact such legislation would have on travel and trade between Michigan and Ontario.

In all, Michigan companies made sales to 191 markets worldwide last year. Mexico ($4.1 billion), Japan ($1 billion) and Germany ($1 billion) followed Canada as the three major buyers of products made in Michigan.    

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