Bordering on Greatness

Michigan’s relationship with its Canadian neighbor provides a major economic advantage

by John Foren
November 16, 2009

Editor’s note: In this increasingly global economy, Michigan’s most important “foreign” relationship is close at hand, with neighboring Canada. This is the first in a regular series of features in which Dome explores major political, policy and cultural issues between Michigan and Canada and the importance of this relationship to the state’s future. The series is made possible through a sponsorship by the Canadian Studies Center at Michigan State University.

From his office at Northern Michigan University in Marquette, Michael Broadway looks out over the roiling waters of Lake Superior and admits, “Canada seems so far away.”

It’s a telling comment from someone who not only teaches about U.S.-Canada relations but is a board member of the Association for Canadian Studies in the United States, devoted to raising awareness about relations between the two countries.

Even Broadway admits selling Americans, notably Michiganians, on the importance of Canada is difficult.

“It doesn’t appear on their radar screens. [Americans] say, ‘They’re just like us,’ ” he says.

That’s the perception, at least. Canadians would be the first to tell you how different they are from their American neighbors, both culturally and politically — not to mention how much more they are aware of the United States than vice versa.

Broadway recalls the surprise NMU students felt when he took them on a trip to the Canadian capital of Ottawa.

“They were amazed that Canada was different from the U.S. and had a parliamentary system,” he said.

The two sides at least have numerous common interests, and that’s a key distinction for those pushing for stronger ties between Michigan and its international neighbor to the north, east and, yes, even a bit south.

Critical Importance
The relationship and proximity between the Great Lakes State and Canada may be critically important to Michigan’s future.

At a time when Michigan is scrambling, fumbling and grasping for any economic advantage, the state has a couple of huge geographic advantages: Canada and the Great Lakes they share.

More trade flows between Windsor and Detroit than any other border crossing in the world, reaching tens of billions of dollars annually. Canada is Michigan’s most important trading partner, which means thousands of state jobs are tied to economic activity between the two sides. A recent fact sheet distributed by the Canadian government pegged the amount of Michigan-Canada trade at $78 billion annually, and the number of trade-related jobs in Michigan at 221,500.

Michigan may be looked upon nationally as a has-been, tied to an antiquated industrial economy. But experts say there’s huge untapped potential in working closer with Canada in the new economic world order.

“The proximity to Canada is a competitive advantage for Michigan,” said Sarah Hubbard, senior vice president of government relations for the Detroit Regional Chamber.

Without many Michigan residents realizing it, our relationship with Canada helps shape not only our economics, but segments of our social life, identity and even our politics.

The latter is most evident in the debate over Canadian trash coming to Michigan landfills — more than 10 million cubic yards, or about 20 percent of all garbage in the state. And, yes, expect to hear those figures a lot in the coming election year as some state lawmakers fume about imported waste threatening Michigan residents.

But Canada is, and can be, so much more to Michigan, many economists and trade experts say.

Border Issues
“My economic vision is to see the border between us and Canada no different than the border between Michigan and Ohio,” said former state Treasurer Doug Roberts, who’s now director of the Institute for Public Policy & Social Research at Michigan State University. “My goodness, what are we waiting for?”

The border — and how to make it secure while maximizing trade — is one huge issue for Michigan and Canada. After all, the Ambassador Bridge in Detroit is the nation’s top border crossing, handling a quarter of all trade between the U.S. and Canada.

Tweaking the transportation network of highways, rail lines and air freight terminals also is on the agenda of policymakers from both sides.

Among other things that make the Michigan-Canada relationship unique:

• The state’s several border communities, such as Port Huron, and how they are shaped by their international neighbor.
• Shared environmental issues, such as protecting the Great Lakes.
• Efforts to work together to produce new energy sources, using the natural resources they share as neighbors in the Great Lakes basin.
• Extraordinarily close ties in agriculture.

Michigan exported $24 billion in goods to Canada last year, more than half of its overall exports. Much of that is in vehicle parts as auto plants trade supplies between the borders. But there’s also computers, furniture, and iron and steel.

In addition, Michigan buys more than $1 billion of Canadian oil and another $1 billion in natural gas annually — far more than comes in from the Mideast.

Business advocates believe the amount of trade can grow significantly. But they point to border policies between the U.S. and Canada since the September 11 terrorist attacks as being a hindrance to open and expanded commerce.

The U.S. and Canadian chambers of commerce jointly issued a strongly worded report in July called “Finding the Balance: Shared Border of the Future.” As the title suggests, the report called for ways to reduce border backups that have trucks sometimes waiting hours to cross the bridge or tunnel. Chief among the recommendations: allowing so-called low-risk travelers and trusted shippers to speed through quicker, instead of holding everyone to the same security standard.

The business community is putting on a full-court press over the issue, buoyed by impatience from everyone who’s ever been stuck in an achingly long border line. The trouble, say those pushing for changes, is that post-9/11 security concerns are going too far and treating every family, day traveler and businessperson as a potential terrorist.

“My wife and I go to Port Huron, spend the night there and decide to spend a couple hours in Canada,” Roberts recalls in frustration. “When coming back, the American border agent says to us, ‘Where are you from?’ and starts questioning us. After a couple of those [incidents], you don’t want to go back.”

Adds Roberts: “There’s got to come a time when we appreciate Canada is not the same problem as the southern border [with Mexico].”

This isn’t just a matter of a few minutes, or hours, of inconvenience for everyday drivers, business leaders say. It represents significant and unnecessary restrictions on trade and commerce.

The federal government has had a legitimate reason to focus on border security since 9/11, conceded the Detroit Chamber’s Hubbard. But the effort “has been, for the most part, trumping trade,” she said.

That’s led to some shippers being overdone by paperwork or undergoing rigorous searches that detain them at the border for hours, Hubbard said. And that can cause a huge ripple through a supply line, as evidenced on 9/11 when the closed border in Detroit started impacting auto plants in the south within hours, she said.

“There’s an across-the-board approach to security that everyone has to go through the same protocol, when in reality a lot of freight is at low risk,” Hubbard said.

The net effect, she said: “We definitely aren’t able to capitalize as much as we should be on our proximity to Canada.”

Still, Michigan has seemingly boundless opportunities to benefit economically from its ties to Canada.

Hubbard cites the major railways that share lines between the two entities and the edge Michigan has as a U.S. entryway for goods from the crucial port of Halifax, Nova Scotia. The port of Detroit is ripe for bulk shipping and to take on goods that have traditionally entered the Great Lakes through Chicago, she said.

“We think the opportunity is huge and it’s something we’re really trying to get everyone to focus on. And we’re gaining traction,” Hubbard said.

Michigan’s proximity to Canada gives it a clear competitive advantage. Now, she said, it’s a matter of bringing together many regional forces to improve the area’s infrastructure and work on technology that can track and move shipments more efficiently.

Bioenergy
Technology is at the heart of a less obvious but a potentially critical part of Michigan’s relationship with Canada: bioenergy.

Michigan’s woodland and its geography have more in common with Canada than with its Midwestern brethren, said Steven Pueppke, director of MSU’s Office of Biobased Technologies and of the university’s Michigan Agricultural Experiment Station.

Instead of turning to corn, Canadian and Michigan researchers are working on how to convert their woods into ethanol and meet the federal mandate to increase renewable energy.

MSU works with Canadian firms on improving their bioenergy technologies and helps link them with corporate partners in the U.S. Pueppke hopes the relationship will extend farther, to Canadian higher education institutions, such as the University of Guelph in Ontario, that have major agriculture and bioeconomic programs such as MSU.

“We’re in a very, very good geographic position,” he said. “Again, it’s the trees and the land that can grow biomass (plant and animal material used as fuel), and that’s probably not very good agricultural land that is an immense asset we share with Canada.”

It’s one of many links between Michigan and Canada that could hold the key to the state’s economic future.

John Foren is the former editor of The Flint Journal and spent years as a reporter for Booth Newspapers in Washington D.C., Lansing and Flint. He is an instructor at the Michigan State University School of Journalism.