Border Security and Canadian Exports to the United States: Evidence and Policy Implications

Abstract

Border security-related costs and delays incurred by shippers have been cited by some observers as a significant impediment to trade between Canada and the United States. In fact, there is relatively little empirical evidence evaluating this concern. While there is some evidence that costs of exporting from Canada have increased as a result of post-9/11 border security developments, available econometric trade models offer contradictory evidence on whether or not the higher costs have reduced Canadian exports below what would otherwise be expected. This paper identifies and evaluates the sources of divergent results found in existing studies. It also provides some new evidence of significant shortfalls in Canadian exports to the United States beginning in the third quarter of 2001 and continuing through the end of 2007.