Sector outlook: Border blues

Sectors in-the-know investors will definitely want to keep an eye on

Canadian tourism may get a bit of a reprieve from tough new U.S. border identification requirements, as politicians recently approved a possible delay. But moving the land implementation date of the Western Hemisphere Travel Initiative from Jan. 1, 2008, until as late as June 1, 2009–thanks to lobbying by the likes of New York Congresswoman Louise Slaughter–merely delays the inevitable. Passport requirements for those entering the U.S. by plane take effect in January 2007–and sooner or later, the full consequences of WHTI will be felt here.

For starters, the land provisions can be moved up if those implementing the WHTI feel they're ready. And while Canada could be helped by plans to let U.S. citizens get a special identity card that's easier and cheaper to obtain than a passport, there's already confusion about what WHTI rules mean, so fewer Americans are now crossing the 49th parallel.

A Conference Board of Canada report, prepared before the possible deadline extension was passed, says WHTI confusion meant there were 737,000 fewer trips into Canada from the U.S. in 2006–30.72 million versus 31.46 million. The drop will be even greater, more than 1.7 million fewer trips, in 2007. The board says WHTI will mean $186 million less in travel receipts from U.S. visitors in 2006, and $529 million less in 2007. The combined net impact on Canadian tourism by 2010 could be 11.75 million fewer trips and $3.2 billion fewer receipts. (This takes into account Canadians who will travel within Canada instead.) The full implementation of WHTI, the board notes, will mark “a new era in Canada-U.S. travel patterns.”