International Trade

Because provisions of the four-year-old U.S.-Canada Free Trade Agreement are complex and long term, the agreement's precise effect on U.S. business cannot yet be determined, but duties have been already eliminated on some products and are being phased out on others, and trade has risen by more than 15 percent. Government agencies in the United States and Canada have undertaken steps to implement the agreement and have often cooperated in helping businesses learn about its provisions. Problems have included border delays and difficulties in complying with Canadian product standards and technical requirements. Some U.S. businesses have encountered problems in complying with the agreement's rules of origin and in completing the required Exporter's Certificate of Origin. Efforts are under way to improve federal coordination in promoting trade, and some interest exists in establishing a single, centralized source of information on and assistance with the agreement. Although the Customs Service is coordinating implementation of the agreement and related Customs commercial activities along the northern border, the agency has decided to assign the project limited responsibilities and staff.

GAO found that: (1) U.S. and Canadian agencies conducted training and educational programs for staff, Customs brokers, and interested businesses, and worked together on technical standards, accreditation and licensing standards, border-crossing procedures, and rules of origin to implement FTA; (2) FTA implementation has accelerated elimination of duties and established effective dispute resolution systems, but some problems remain; (3) although FTA effects were difficult to isolate from other economic factors, FTA implementation was successful, and trade increased more than 15 percent; (4) traffic congestion, poor infrastructure, and inadequate customs staffing at primary inspection booths caused border-crossing delays; (5) U.S. and Canada Customs expanded automated cargo-processing systems to prevent delays; (6) the United States and Canada have been slow in developing uniform product standards; (7) many businesses believed that the rule of origin and exporters' certificate requirements and documentation are too restrictive, and that complying with them imposes a costly administrative burden; (8) because many federal agencies share responsibility for implementing FTA, several agencies have attempted to improve coordination and availability of services by establishing a full-service, comprehensive information source for small- and medium-sized companies; (9) there was no consensus among agency officials and the private sector on the need for an ombudsman; and (10) Customs has established its own trade ombudsman to deal with the trade community and ensure operational consistency among Customs districts, and initiated Project North Star to monitor FTA implementation.