[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
    BUILDING A WALL BETWEEN FRIENDS: PASSPORTS TO AND FROM CANADA?
=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                   WASHINGTON, DC, NOVEMBER 17, 2005

                               __________

                           Serial No. 109-37

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Slaughter, The Honorable Louise (NY-28), Congresswoman, U.S. 
  House of Representatives.......................................     4
Engler, The Honorable John, President and CEO, National 
  Association of Manufacturers...................................     6
Kephart, Ms. Janice L., Former Counsel, 9/11 Commission..........     8
Staub, Mr. Ken, Vice President, Riverside Service Corporation....    11
Cook, Mr. William, Senior Manager, Worldwide Transport Design & 
  Procurement, DiamlerChrysler...................................    13
Chestnut, Mr. H. Thomas, President & CEO, AAA of Western and 
  Central New York...............................................    15
Zemsky, Mr. Howard, Managing Partners, Taurus Partners, LLC......    18

                                Appendix

Opening statements:
    Manzullo, Hon. Donald A......................................    34
    Velazquez, Hon. Nydia........................................    36
    Grijalva, Hon. Raul..........................................    38
Prepared statements:
    Slaughter, The Honorable Louise (NY-28), Congresswoman, U.S. 
      House of Representatives...................................    40
    Engler, The Honorable John, President and CEO, National 
      Association of Manufacturers...............................    54
    Kephart, Ms. Janice L., Former Counsel, 9/11 Commission......    62
    Staub, Mr. Ken, Vice President, Riverside Service Corporation    82
    Cook, Mr. William, Senior Manager, Worldwide Transport Design 
      & Procurement, DiamlerChrysler.............................    96
    Chestnut, Mr. H. Thomas, President & CEO, AAA of Western and 
      Central New York...........................................    99
    Zemsky, Mr. Howard, Managing Partners, Taurus Partners, LLC..   101
Additional items for the Record:
    Reynolds, Hon. Tom (NY-26), Congressman, U.S. House of 
      Representatives............................................   105
    Chestnut, Mr. H. Thomas, President & CEO, AAA Western and 
      Central New York...........................................   109
    Letters from interested parties..............................   110

                                 (iii)


     BUILDING A WALL BETWEEN FRIENDS: PASSPORTS TO AND FROM CANADA?

                              ----------                              


                      THURSDAY, NOVEMBER 17, 2005

                   House of Representatives
                                Committee on Small Business
                                                     Washington, DC
    The Committee met, pursuant to call, at 9:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Donald A. Manzullo 
(Chairman) presiding.
    Present: Representatives Manzullo, Velazquez, King, 
McCotter, Poe, Bordallo, and Higgins.
    Chairman Manzullo. Good morning and welcome to this 
hearing. There is a looming crisis at our borders and if the 
enhanced documentation requirement for travel to cross our land 
borders is not handled correctly, it could spell trouble for 
many of the manufacturing and tourism sectors of the economy. 
Obviously there are hundreds of thousands of small businesses 
in both those sectors.
    This problem is especially acute for our neighbors to the 
north. The Intelligence Reform and Terrorism Prevention Act of 
2004 requires that the Department of Homeland Security and the 
State develop and implement a plan for U.S. citizens and 
foreign nationals to present a passport or other appropriate 
security identity and citizen documentation when entering the 
U.S.
    As of January 1, 2008, this enhanced documentation is 
supposed to apply to all land border crossings including 
Canada. For years, Americans and Canadians have been used to 
simply showing a driver's license to cross the border. Now this 
will change.
    The impact of the enhanced documentation efforts on the 
economies of Canada and the U.S. is still unclear. What is 
clear is that the legislation also contains another mandate not 
frequently mentioned that it, ``Seek to expedite the travelers 
or frequent travelers including those who reside in border 
communities.''
    I have worked with officials from Departments of State and 
Homeland Security in the past on visa issues and I am impressed 
with the quality and competence of the people involved in this 
discussion. They are all senior career officials.
    Earlier this year we worked out a one-year multiple entry 
visa for Chinese business persons wishing to come to the United 
States to attend a trade show or inspect or be trained on a 
U.S. product. The same people are working on the Western 
Hemisphere Travel Initiative. They are taking this mandate very 
seriously.
    This is evidenced by their effort to go through all the 
appropriate steps in the rule making process including issuing 
an Advanced Notice of Proposed Rule Making in which DHS and 
State seek comments and assistance on how to best go about 
enhancing security at our border while not impeding legitimate 
commerce.
    I commend DHS and State for going through this process. It 
may seem difficult and slow at the outset but the final 
regulation will be a better product if the Agencies seriously 
take into account the legitimate concerns of small businesses.
    As part of that process I strongly encourage DHS and State 
to prepare an initial regulatory flexibility analysis to 
accompany the Advanced Notice of Proposed Rule Making. I am 
pleased that the Chief Counsel of the Office of Advocacy at the 
Small Business Administration, Tom Sullivan, agrees with my 
request in order to minimize the impact of this proposal on 
small entitles.
    There are no Government witnesses testifying at this 
hearing today because they know the intensity of the trade with 
North America and the difficulty of the task ahead of them in 
balancing economic and security interest. This hearing is part 
of an effort to help DHS and State collect information that 
will assist them in completing an accurate and comprehensive 
economic analysis.
    The main purpose of this hearing is to demonstrate that the 
maximum amount of commerce within the Western Hemisphere, 
particularly between the U.S. and Canada, and the complexities 
of trade between the two countries, may make it next to 
impossible to fulfill the statutory mandate to require this 
enhanced documentation and not dampen the economies of the U.S. 
and Canada.
    Few people know that Canada is our largest trading partner 
with $1.2 billion in trade crossing the longest non-militarized 
border in the world every day. This 4,000-mile border stretches 
across 11 states and eight provinces encompassing an economic 
sphere affecting 51 million Americans and 30 million Canadians.
    Directly or indirectly the U.S./Canadian border is integral 
to 5.2 million jobs. Travel and tourism alone create a $10.3 
billion economic benefit to the United States. I fear that this 
proposal would have the most negative consequences for the 
casual or infrequent tourist, particularly families with minor 
children who would rather vacation in their own country rather 
than pay $95 for a passport or $40 for security identity card 
to cross the border.
    For example, my sons go to Grove City College in Grove 
City, Pennsylvania. They are both English majors. One weekend 
on a whim they decided to go to Niagara on the Lake in Canada 
for the George Bernard Shaw Festival. Five college students 
went there. Neil and Noel have passports. Their passports are 
at home and were not in their possession. I am sure those two 
could have gotten through with a passport. Are the other three 
college kids going to pay $40 for a card that would take six to 
eight weeks to get? No.
    That is the problem. This would severely hamper travel 
between Mrs. Slaughter's district and the Niagara on the Lake. 
This proposal affects not just tourism but also manufacturing. 
Few people realize our two nation's automobile industries are 
virtually integrated comprised of nearly 23 percent of total 
U.S. exports to Canada with parts and finished goods crossing 
the border multiple times.
    We don't need another reason for American manufacturers to 
leave our shores or for direct foreign investment to dry up if 
it becomes more difficult to trade with Canada. I believe there 
is a way to accomplish goals of enhanced security at our land 
borders and not disrupt commerce.
    What I would like you to do is when testifying tell your 
story. You can touch upon proposed problems and proposed 
resolutions, and many are out there, but don't overload it on 
the latter. The purpose of this hearing is to give additional 
information to the wonderful people we have been working with 
at the Department of State and Department of Homeland Security 
to give them even more of a bird's eye view as to the intensity 
of the problem.
    If you load up on problems, lighten up on possible 
solutions. That would help, but obviously use your own 
discretion. We use a five-minute clock. Our first witness after 
Ms. Velazquez' opening statement will be Congresswoman 
Slaughter.
    Louise, you can testify and then you can leave anytime that 
you would like.
    Ms. Slaughter. Thank you, Mr. Chair.
    Chairman Manzullo. I now yield for an opening statement to 
the gentlelady from New York, Ms. Velazquez.
    [Chairman Manzullo's opening statement may be found in the 
appendix.]
    Ms. Velazquez. Thank you, Mr. Chairman. As time as told us, 
our nation's security should not be taken lightly. The 
terrorist attacks of September 11 taught us this important 
lesson and made it clear that America needs to step up its 
efforts to prevent terrorists from entering the confines of our 
borders.
    Many strides have been taken to make this country safer 
following the attacks. A variety of measures at the local, 
state and federal level are now in place to secure our borders 
and fight terrorism both at home and abroad.In an effort to 
bolster security for our citizens, we must recognize that 
America's borders whether by air, land, or sea are an entrance 
for a host of people, goods and services that help fuel our 
national economy.
    In our fervor to strengthen these protections, some of 
these security measures have had unintended consequences on 
many sectors of the population including small 
businesses.Today's hearing will give us a chance to look at the 
ongoing rule making as established in a portion of the 
Intelligence Reform and Terrorism Prevention Act. This 
initiative, the Western Hemisphere Travel Initiative, will 
require some additional forms of identification for cross-
border travel from Canada and Mexico.
    While we can all agree that there is a responsibility to 
regulate who crosses through these entry points, it needs to be 
done in a manner that protects our borders with out harming 
small businesses. There is no question that any regulatory 
change in documentation required for cross-border travel as 
suggested in the proposal will have a major impact on thousands 
of small businesses.
    With a significant portion of their customer base located 
across the border, it is vital that any changes made to current 
cross-border travel regulations take into account the needs of 
these small businesses. Imposing steps such as passport 
requirements for potential customers may greatly impede the 
success these businesses, when less costly alternatives may be 
available.
    However, I think it is difficult for us to truly assess the 
impact without the agencies responsible for implementation 
Department of State and Department of Homeland Security even 
present at this hearing today. How are we supposed to get the 
full story, when the beautiful and wonderful people from these 
two agencies are not even here?
    We can sit here and talk about possible effects on 
industries and the small business sector all day long but if 
these departments are not here to engage in these discussions, 
they still may go ahead with this proposal hurting small 
businesses.
    We need these agencies to perform a full economic analysis 
taking the needs of entrepreneurs into account. This will allow 
for a true determination of the impact and economic costs of 
this cross-border identification proposal. Yes, we need to 
secure our borders but America's small businesses, which 
already face many challenges, deserve a less costly, less 
burdensome plan that does not pose a threat to their success.
    As we work to secure America's borders and thwart 
terrorism, the need for increased security is certainly 
warranted. However, too many of our nation's most prosperous 
industries including travel, tourism, manufacturing, and local 
border towns have been put at an unfair disadvantage. This is 
especially true if these possible proposals are adopted and 
enacted without adequate review.
    When these policies go as far as to threaten the role small 
businesses play in the economic recovery and future 
competitiveness of our nation, it becomes clear that we need a 
plan that offers a healthy balance between safety and commerce. 
We simply cannot afford to damage the livelihood of our 
economic security. Thank you, Mr. Chairman.
    [Ranking Member Velazquez's opening statement may be found 
in the appendix.]
    Chairman Manzullo. Thank you for that statement. We are 
delighted and grateful to have the Honorable Louise Slaughter 
testify for us today. Ms. Slaughter represents the 28th 
District of New York including the Niagara Falls area and the 
city of Tonawanda, two of the most heavily trafficked border 
crossing areas in the north east. I Chair the U.S./Canadian 
interparliamentary exchange and Louise has been an active 
member of that exchange ever since the time she was elected.
    We look forward to your testimony and we have the five-
minute clock that applies to members also. When you see the 
yellow, that means you have one minute. When you see red, I 
start to get a little anxious.
    Ms. Slaughter. Yes, sir.
    Chairman Manzullo. We look forward to your testimony. 
Louise, if you could pull the mic a little bit closer to you.
    Ms. Slaughter. Is that better?
    Chairman Manzullo. That is fine. Thank you very much.

STATEMENT BY THE HONORABLE LOUISE SLAUGHTER (NY-28), U.S. HOUSE 
                       OF REPRESENTATIVES

    Ms. Slaughter. Thank you, Mr. Chairman. I appreciate your 
hospitality and also to Ranking Member Velazquez. Thank you for 
holding for this hearing and I appreciate your staffs and all 
the work they have done to put this important hearing together. 
I will briefly summarize my written statement.
    Mr. Chairman, the United States and Canada have always been 
bound by the sheer geography and share culture, history, and 
values. In many ways we are two truly intertwined communities 
moving as one. In the northern border regions we depend upon 
each other every day. The current Western Hemisphere trade 
initiative plan as it stands before us jeopardizes that close 
relationship. It will have an absolutely devastating affect on 
the economic futures of our border communities, specially the 
communities that I represent, as you mentioned, Buffalo, 
Niagara Falls, and Rochester.
    U.S./Canada supports 5.2 million jobs and it contributes 
tens of billions of dollars to our respective economies. In my 
district alone $160 million in trade and 20,000 vehicles cross 
Buffalo's Peace Bridge every day. The Niagara frontier is the 
gateway for millions of tourists each year.
    Let me say that one of the things that we are most 
concerned about is the numbers of people who come into the area 
in northern New York who might suddenly decide that they would 
like to take a jaunt over into Canada only to find that they 
don't have a passport with them and they are not going to be 
able to get back home. We are already seeing a chilling effect 
because too many people believe that is already the case.
    A report recently issued by the Canadian tourism agency 
concluded that this passport requirement would result in an 
annual loss of 3.5 million outbound trips by Canadians to the 
United States. The estimated loss to the U.S. tourism industry, 
just the tourism industry, $667 million per year, but the vast 
majority of the people who cross that border on a daily basis 
do it for work or for recreation or to see their family or to 
go to mama's for supper, whatever it is that we do. The 
Canadian and the U.S. populations are that intertwined. One 
serious issue is that the British commissioners in my district 
believe that this WHTI will increase the border delays and 
decrease the crossings. One very important point already, the 
fact that there have been fewer crossings at one of our bridges 
has already cost $16 million in bonding capacity because of the 
fewer people crossing on a daily basis. This money is necessary 
for capital improvements. This is one point I really want to 
bear down on that is very important on this bonding capacity. 
Now, we all know that choosing between national security and 
economic strength us a choice that we don't have to make and we 
can't afford to make it and it simply is not fair for us to ask 
the citizens of the border region to shoulder it on their own. 
I do have five concrete recommendations to improve WHTI. 
Because we are supposed to bear down on other things, I will be 
very brief with those. One, I would like to push the NEXUS card 
which I think is terribly important. It is already there. We 
passed an amendment to Homeland Security that would even allow 
us to use NEXUS on airplanes and on the water. That is an 
important card for people who cross frequently. One of the 
things that we are very concerned about is that there is no 
economic analysis on any of this. GAO has agreed to do one for 
us but, unfortunately, since State and DHS have not yet come up 
with a concrete proposal they can't. Although we think that 
from what we know already, particularly with the bonding 
capacity and the fewer people crossing, that the economic 
impact will be astonishing. We have not done anything to 
promote NEXUS. As a matter of fact, in my part of the border 
you can't even get a NEXUS card on the United States side. We 
have made great strides, I think, in making some changes to 
make it easier for people to get across using that NEXUS card 
but now we have to push the card itself and ask the Government 
to help us to sell that card. Certainly that will relieve the 
congestion at the border as well as making it easier to cross.
    Third recommendation is that if there is going to be a 
border card, which the State Department is talking about, it 
has to be inexpensive, it has to be easy to obtain and, as I 
pointed out, NEXUS is not, and it has to be marketed across the 
United States because we wanted to make sure that when people 
do come up north and they decide they do want to go over to 
Canada, as Chairman pointed out, up to this point all we ever 
had to say to anybody at the border is where we were born.
    The complication of it really has to be simplified as much 
as possible. Further, we think DHS and State should consider 
alternative documents that will satisfy citizenship and meet 
requirements for crossing the border. Providing both options 
and convenience for spontaneous travelers is critical. The 
Department of State's current vision for the BCC, the card, 
falls very short here and we think will result in a steep 
decline in cross-border traffic. Now, if we are going to 
consider enhanced driver's license, which has been talked 
about, as an alternative --
    Chairman Manzullo. Time, Louise.
    Ms. Slaughter. -- of passports. Okay. We would sure like to 
know if they are going to make it simple and good and please 
don't hurt the U.S./Canada relationship. The border problems in 
the United States are not on our border. Thank you so much and 
thanks to all the members of the Committee.
    [Congresswoman Slaughter's testimony may be found in the 
appendix.]
    Chairman Manzullo. Thank you. The written statements of all 
the witnesses will be made part of the permanent record without 
objection.

    Chairman Manzullo. Our next witness is Governor John 
Engler, President and CEO of National Association of 
Manufacturers. Governor Engler negotiated and brokered and 
U.S./Canadian Free Trade Agreement. He has a vast amount of 
knowledge not only on the part -- that is not true, Governor? I 
thought that was the case.
    Mr. Engler. That is a bit more than deserved, believe me.
    Chairman Manzullo. Well, whatever it is. It was there 
during your watch. Okay. We will take that out of the biography 
that wasn't in it. In any case, we appreciate your taking the 
time. NAM obviously represents small and large manufacturers 
across the country and we look forward to your testimony.

STATEMENT OF THE HONORABLE JOHN ENGLER, NATIONAL ASSOCIATION OF 
                         MANUFACTURERS

    Mr. Engler. Thank you very much, Mr. Chairman. I am 
delighted to be here. And to Congresswoman Velazquez and to the 
members of the Committee I am delighted to have this 
opportunity. I appreciate the meeting concerning this Western 
Hemisphere travel initiative and specifically this new 
requirement, or new since 2004, that U.S. travelers present a 
passport or other secure travel document to reenter the United 
States from Canada.
    Having served as Governor of Michigan for 12 years I have 
seen first hand how important business, social, and cultural 
links with Canada. The Congresswoman hit it right on the head 
in her excellent testimony. This is a very close special 
relationship that we have. Our border policies need to 
recognize that special relationships. We certainly understand 
the challenges the Government faces in seeking to improve the 
security of the homeland after 9/11.
    That is a priority and there has to be a clear and keen 
focus on improving management of our borders. At the same time 
trade with Canada and Mexico is vital for U.S. manufacturing 
and the U.S. economy as a whole. Consumers, workers, businesses 
derive immense benefits from these important and long-standing 
trade relationships.
    The NAM has been reassured by repeated statements to the 
administration that it is seeking both to advance North 
American security and streamline efficient movement of 
legitimate low-risk traffic across shared borders. The proposed 
initiative raises several key concerns.
    Flexibility is a question on appropriate secure travel 
documents. In addition to passports the proposed regulation 
indicate they are likely to be quite limited, the NEXUS 
identification cards that the Congresswoman would like to see 
expanded issued jointly by Canadian and U.S. issuers, the FAST 
driver's license, perhaps other special identification cards.
    The problem is relatively few Americans, about 20 percent, 
have passports. Only a small percentage of them have other what 
would qualify as secure identification cards. There is the 
question of cost for business, additional cost not just to 
ensure that all relevant employees have passports, but also the 
coordination that would now be required. Congressman McCotter 
frequently would go to Windsor for lunch. If he were a business 
employee he wouldn't be able to visit in Windsor so readily on 
the spur of the moment. He would have to plan ahead.
    As one NAM member and CEO pointed out, small business would 
have to provide passports, not just for the few who are 
directly involved but many other might be called to serve 
customers in a variety of capacities. Maybe emergency repair. 
Additional border cost may not seem like they are much compared 
to other business cost but manufacturers today, particularly 
the small manufacturers, are really challenged as never before 
to control their cost in order to stay competitive.
    In 2003 the NAM documented U.S. manufacturers faced 
external overhead cost in the order of 22 percent higher than 
major foreign competitors. Border related cost related to 
Custom security compliance, border delays have increased 
significantly since 9/11.
    The third concern relates to a relatively short deadline 
for requiring new travel documents. The WHTI would mandate use 
of passports or any other new secure travel documents by 
December 31, 2007. That actually while seemingly far away is a 
short time to educate the millions of travelers who for years 
have been accustomed to crossing the border.
    In fact, I have to confess that since 9/11 twice I have 
gone to Canada both times forgetting the passport and having to 
talk my way in and out with the driver's license and such other 
materials as I had with me. The NAM recommends much more 
flexibility on travel documents that can be used in place of a 
passport. We certainly would urge the departments involved to 
consider allowing other types of documents that are more 
readily available and less costly.
    One option that has been discussed and discussed nicely in 
some of the documentation in the congressional research that is 
available for the committee and I think really deserves close 
examination the Greater Detroit Chamber of Commerce has an 
excellent paper on this is the REAL ID Act on how we can use 
driver's licenses and their issuance under stricter standards 
that could either stand alone or be used in combination with an 
original birth certificate.
    The REAL ID Act sets high security standards for the state 
driver's license and other state identification cards starting 
in May of 2008. That is almost the same deadline as WHTI. We 
would support sort of harmonizing those if that were helpful.
    We think that with the REAL ID Act, especially if there 
were a voluntary part, much is made of whether or not states 
have the authority to determine citizenship and I submit that 
the states wouldn't be determining the citizenship. They would 
be taking advantage of a predetermination made already through 
the passport or other federal mechanism as manufacturers work 
with you.
    I am out of time so, Mr. Chairman, I will stop at that 
point. I have submitted more detailed testimony for the 
Committee. As always, we are ready to answer questions and work 
with you.
    [Governor Engler's testimony may be found in the appendix.]
    Chairman Manzullo. Thank you, Governor Engler.
    Our next witness is Janice Kephart, former counsel to 9/11 
Commission. She is former Immigration counsel on the Commission 
and will offer some good insight on border security 
recommendations from that report. We look forward to your 
testimony.

                STATEMENT OF MS. JANICE KEPHART

    Ms. Kephart. Thank you, Mr. Chairman. Thank you, Mr. 
Ranking Member. Thank you for having me here today. I very much 
appreciate your interest in the Western Hemisphere travel 
initiative and why it is important for the security of the 
United States and for our economy.
    Although it is my viewpoint I represent here today, I 
believe I am in step with my 9/11 Commission colleagues when I 
asked this Committee and its constituency to work together to 
help ensure that our Government implement the 9/11 Commission 
recommendations regarding requiring a passport or equivalent 
for entry from Canada, Mexico, and the Caribbean, a 
recommendation based squarely on my border team's findings 
about terrorist travel.
    To achieve national security a responsible nation must 
effectively scrutinize those who seek to enter and stay. 
September 11 has taught us that securing U.S. borders are a 
matter of national security. However, let me be clear we need 
not give up privacy, nor give up commerce to attain border 
security.
    In fact, with efficient and streamline security privacy and 
commerce are both enhanced. People and goods that should make 
it through the system in an efficient manner are more likely to 
do so when the acceptable forms of travel documents go from 
dozens to few and these few are not state or local documents 
but federally issued, biometrically based and vetted with a 
handful of acceptable documents working alongside registered 
traveler and commercial programs are ports of entry finally 
have the opportunity to become efficient, well run, and more 
secure.
    With WHTI as envisioned today, unnecessary inspections and 
the inconveniences that go along with them are less likely to 
occur. That is a win for commerce, the commuter, the tourists 
and, frankly, most importantly from our view point, the 
American people. A win for the American people doesn't stop 
there.
    Right now my understanding is that the State Department and 
DHS plan not only to accept the NEXUS, FAST, Century, and 
border crossing cards as acceptable forms of ID for frequent 
cross-border travel, but the State Department is also going to 
be offering a North American travel card or equivalent. This 
card will be about half the cost of a passport, fit into a 
wallet like a driver's license, protect privacy, can be vetted 
against national security information, and will be available at 
the 7,000 passport offices across the United States.
    This will help those in the border communities who do not 
need a passport for international travel but, nonetheless, do 
have an interest in crossing the border. Where does the 
terrorist end up with WHTI? With a difficult choice. Under WHTI 
the terrorist can no longer present an unauthenticated document 
containing unverifiable information. Instead the terrorist has 
to choose risk getting caught by attempting an illegal entry or 
risk being detected by U.S. authorities at the border when 
presenting a passport or by Canadian authorities when applying 
for a passport.
    So who are these terrorists? Let us start from what we know 
from the Canadian Intelligence Agency. Canadian Intelligence 
tells us that Canada has a significant terrorist community. 
About 50 terrorist organizations actively operating there and 
about 350 individuals being actively watched. Terrorist 
financing more than doubled in Canada last year to the tune of 
$2 billion.
    Canadian anti-terrorist legislation passed after 9/11 is 
not retroactive so that those trained in Afghan camps prior to 
9/11 remain at large and Canadians have a significant concern 
with ``second generation jihadists'' who can easily attain 
passports and slip through the borders but right now don't even 
need a passport to cross the border.
    We know that LAX Millennium bomber Ahmed Ressam probably 
would have gotten away with presenting a fake Canadian passport 
if his behavior hadn't caught the attention of the Customs 
officer on duty the evening he attempted entry. We know the FBI 
seeks out a number of naturalized Canadian citizens that have 
$5 million bounties on them.
    For example, Abderraouf Jdey was originally slated to 
participate in the 9/11 plot and he dropped out to be part of a 
second wave of attacks. He is wanted to day. There is also Amer 
Al-Maati, a trained pilot and Canadian citizen who has vowed to 
crash a plane into a U.S. building. Then there is also a U.S. 
legal permanent resident by the name of Adnan El-Shukrijumah 
who is considered highly dangerous having been Jose Padilla's 
original partner in the dirty bomb plot and believed to have a 
false Canadian passport. He remains at large.
    The point is we don't want these people to get into the 
country. We need to see them found. With a regime like the 
Western Hemisphere travel initiative they are less likely to 
get in and, if they do, we are more likely to catch them. Of 
course, there is never a guarantee. However, when border 
officers can focus on high-risk applicants for admission they 
will spend substantially less time on people that don't need to 
be checked each time they come over the border to work or buy 
or deliver something that enhances are economy. That means what 
the American people end up with is security and facilitation 
and the terrorists have a harder time traveling to carry out 
their mission.
    Chairman Manzullo. How are you doing on time?
    Ms. Kephart. I thank you for your support and I hope that 
is something we can all agree on at the conclusion of this 
hearing. Thank you, sir.
    Chairman Manzullo. I think you have testified at 
Congressional hearings before, haven't you?
    Ms. Kephart. A couple times.
    Chairman Manzullo. There you are. Thank you very much.
    Ms. Kephart. Thank you.
    [Ms. Kephart's testimony may be found in the appendix.]
    Chairman Manzullo. We have guest member here, Mr. Higgins 
and your constituent is Howard Zemsky. Is that right? He is not 
here yet? Is he coming? Does anybody know? All right. So he 
will be coming in late.
    Mr. Higgins, why don't you go ahead and introduce him even 
though he is not here because I have no idea when he is going 
to come.
    Mr. Higgins. There is another gentleman here.
    Chairman Manzullo. You want to do that? Why don't you 
introduce both of them?
    Mr. Higgins. Thank you, Mr. Chairman, for your leadership 
and Ranking Member Velazquez, for your leadership on this issue 
as well. We have several people from western New York including 
Ken Staub who is representing the American Trucking 
Association. He is Vice President of Riverside Service 
Corporation. He has traveled from Buffalo today to tell us of 
the impact of the proposed passport requirement on the trucking 
industry and the movement of goods and commerce between the 
United States and Canada, between western New York and southern 
Ontario.
    Additionally, Howard Zemsky, who we were told had some 
travel difficulties today, is a western New York business 
leader and civil leader for and from Buffalo and western New 
York who has considerable investments in both the United States 
and Canada. As I said, he is a business leader who has first-
hand knowledge of not only the adverse impact on commerce that 
the proposed passport requirement would have, but also just the 
rumor, the discussion of the impending passport requirement has 
had an adverse impact on business relations between the United 
States and Canada at western New York and southern Ontario at 
the Peace Bridge so thank you very much, Mr. Chairman.
    Chairman Manzullo. Thank you. On that note let us go to Mr. 
Staub, Vice President of Riverside Service Corporation speaking 
on behalf of his business and the Truckers Association. He is 
also in business with his three sons who all work in the 
transportation industry.
    Mr. Staub, have you ever testified before Congress before?
    Mr. Staub. No, I haven't sir.
    Chairman Manzullo. Why don't you take a sip of water and 
sit back. You look extremely nervous. We just want you to be 
very relaxed and just tell us your story.
    Mr. Staub. We will give it a try.
    Chairman Manzullo. How does that sound?
    Mr. Staub. Sounds good to me.
    Chairman Manzullo. You are up.

   STATEMENT OF MR. KEN STAUB, RIVERSIDE SERVICE CORPORATION

    Mr. Staub. Mr. Chairman and members of the Committee, thank 
you for inviting me to testify today on behalf of the American 
Trucking Association, Inc. on the subject of the Western 
Hemisphere travel initiative.
    I am Ken Staub, of course, Vice President of Riverside 
Service Corporation. We are headquartered in Buffalo, New York. 
We are a truckload flatbed carrier with four tractors, six 
trailers. We have another company, our sister company, Black 
Rock Trucking, operates another 15 tractors and trailers.
    We have 10 employees, 15 owner operators, and we service 
the states of New York, Pennsylvania, Ohio, and Ontario, 
Canada. ATA is a federation of motor carriers, state trucking 
associations, and national trucking conferences that represent 
over 34,000 companies and every type and class of motor 
carrier.
    In 2004 U.S/Canada total trade was $444 billion while U.S./
Mexico trade was $266 billion. Trucking plays a critical role 
both domestically and internationally with Canada and Mexico. 
Annually there are about 14 million truck crossings at our 
international land borders and trucks carrying about 80 percent 
of the freight value of North American surface transport or 
trade.
    The trucking industry has been working with various 
Government agencies since 9/11 and a number of cross border 
security programs have been implemented to improve such 
operations. It is important to emphasize that security and 
trade facilitation go hand in hand. You can't eliminate one at 
the expense of the other.
    Section 7209 of the Intelligence Reform and Terrorism 
Prevention Act of 2004, or IRTPA as we refer to it, requires 
anyone traveling into the U.S. to carry a passport or other 
documents that identify and denote citizenship. Legislation 
provides some flexibility for travelers to use a combination of 
documents that establish this identity and citizenship.
    Chairman Manzullo. Mr. Staub, could I interrupt you? Could 
you tell us about your own experience in the crossings with 
regard to your own company?
    Mr. Staub. I can certainly do that.
    Chairman Manzullo. I didn't see that in the testimony and 
that is what I would like to have emphasized.
    Mr. Staub. Well, if I took my trucking hat off and gave you 
personal experience.
    Chairman Manzullo. That is what we want. Go ahead.
    Mr. Staub. What I do need to tell you about, though, is 
that some of our alternative credentials that have been 
developed in the trucking industry are really pretty important. 
We have had some programs that actually have been developed by 
Homeland Security.
    You have the FAST card. The FAST card is designed for 
trucking and it really expedites the travel and eliminates the 
delays at the border. For us to take and have to have a 
passport in addition to the other credentials that have already 
been made available or mandated on us like the FAST card. NEXUS 
is not a commercial endeavor, however it is available to us.
    The I-94 program, the U.S. Visit program. This is about 
$500 worth of investment in a driver to get these credentials. 
If we had to take and get a passport in addition to them, it 
would just raise the cost. Typically a driver pays for the 
better part of these credentials.
    Now, I might add this, too. The credentials I am talking 
about I feel Homeland Security will probably endorse these as 
alternative documents for the simple reason that they are of a 
higher category than a passport. They require digital 
photograph, fingerprints, and an interview. Passports don't do 
that so I am confident from our perspective, the trucking 
perspective, that these other documents that are either 
available or mandated to us we probably won't have to have a 
passport so we are probably safe in that respect.
    In terms of taking the trucking hat off and putting on my 
personal hat living on the border for 63 or 64 odd years I am 
accustomed to going across and just saying, ``Born in 
Buffalo.'' Typically the process going into Ontario is even 
easier than it is coming back. We are typically kind of almost 
waved through going in.
    Coming back obviously today is a driver's license that we 
have to take and produce. There is no question, and I see that 
we are getting real close on time, so the NEXUS program should 
be emphasized because that would really speed up the flow. We 
are going to need an identity card in addition to our driver's 
license. The NEXUS card would probably fill that niche and that 
gap. Thank you very much for inviting me to testify.
    [Mr. Staub's testimony may be found in the appendix.]
    Chairman Manzullo. Thank you. Appreciate your testimony.
    Mr. Staub. I got a little off course.
    Chairman Manzullo. No, no, you didn't. The prepared remarks 
will be made part of the permanent record.
    Mr. Staub. Okay.
    Chairman Manzullo. It is your personal on-hat and off-hat 
that we are looking for. Otherwise, we could have just accepted 
your testimony by fax. Thank you for coming down. Appreciate 
it.
    Mr. Staub. Thank you very much.
    Chairman Manzullo. Our next witness is William Cook, Senior 
Manager of Worldwide Transport Design and Procurement at 
DiamlerChrysler.
    Mr. Cook, your full statement will be included in the 
record. What I would like the record to indicate is that the 
second page at the bottom, the last paragraph, the first 
sentence there if we just add the words ``per day'' that would 
correct that.
    Mr. Cook. That is correct.
    Chairman Manzullo. Go ahead. We look forward to your 
testimony.

         STATEMENT OF MR. WILLIAM COOK, DIAMLERCHRYSLER

    Mr. Cook. Chairman Manzullo, members of the Committee, 
thank you for the opportunity to address you on this important 
issue. The secure, safe, and efficient operations of the border 
are critical to the DiamlerChrysler business model.
    I would like to take this opportunity to highlight our 
Just-In-Time shipment process. I think it is important in light 
of the proposed passport requirements and what is going to 
happen between the U.S. and Canada. I am submitting my written 
statement.
    Our Just-In-Time manufacturing process is a philosophy. It 
is not a technique. It was originally referred to the 
production of goods to meet customer demand exactly in the 
desired quantity, desired time, and desired quality. It evolved 
into a strategy or a philosophy that minimizes waste. Waste can 
come in the form of wait time, transportation, inventory, and 
poor quality.
    What Just-In-Time management allows us to do is minimize 
all of that. Wait time, particularly at the border crossings, 
is critical to the whole manufacturing process of minimizing 
the wait time. The whole process exposes bottlenecks and one of 
the bottlenecks that we have experienced in the past is the 
Customs process at the border both into Canada and out of 
Canada. It is a risk that we have in our manufacturing process.
    The whole process requires very close coordination between 
our manufacturing and ourselves and our suppliers and our 
suppliers are small trucking companies like Mr. Staub. Many of 
our companies are family-owned businesses, $50 to $100 million 
in total revenue, and we are a big portion of their business. 
We support those companies actively.
    Along with other OEMs and automotive suppliers have been 
applying JIT manufacturing processes since the late '70s in 
response to primarily the Japanese techniques that they 
developed in the '50s and '60s. It has been enhanced by the 
consolidation of production suppliers in general but also 
facilitated by trucking deregulation which allowed us to be a 
lot more flexible, train our carriers and have them operate in 
regions where we want them to operate. The cross-border region 
is critical to us.
    DiamlerChrysler assembly plants typically are constrained 
in the size and the amount of money we can spend to facilitate 
them. We build 1,500 cars a day in the Chairman's district. We 
are about to launch an assembly plant that will build 1,600 to 
1,700 cars a day, three different models so there is a lot of 
complexity. There is not a lot of room in that plant to store 
inventory so we get multiple deliveries per day. I have an 
example of an assembly plant in Jefferson North which is inside 
Detroit. There is a supplier in Windsor that makes eight 
deliveries a day across the Ambassador Bridge to the Jefferson 
North assembly plant.
    In the New Belvedere assembly plant in Illinois there will 
be a supplier in Windsor that when we reach full production by 
the end of next year will have eight shipments a day to 
Belvedere to supply critical stamping, metal stamping 
components to that assembly plant. Those shipments are timed 
out to exact shipment windows and shipment deliveries and there 
isn't room for a lot of extra material in the plant. It is 
critical that, in fact, we meet the timing. Part of the supply 
chain is the Customs process and the border.
    The end result of our manufacturing process is a highly 
integrated supply chain which, as I said, includes the Customs 
processing. We have been a big supporter of the C-TPAT program, 
FAST. We, as well as the other OEMs, have been at the forefront 
of launching the FAST program supporting that. I can tell you 
that has been difficult to find drivers and to find carriers 
that can keep and retain drivers that have FAST cards.
    The driver community as a whole comes from a socioeconomic 
area that sometimes it is difficult for them to, one, pass the 
application or fill out the paperwork as they are on the road. 
It is very difficult to get the cards to the extent that we 
want. We have been able to get our FAST shipments up to about 
95 percent of the shipments on the northern border so we have 
been very successful in doing that but it has been a struggle 
all the way along to keep and retain drivers, I think, for our 
carriers that have that FAST application.
    As far of the border we obviously build vehicles that will 
be--we are responsible on the northern border for about 700 
truckloads across the Ambassador Bridge, 40 rail cars, and then 
300 finished loads per day of about 2,700 cars and trucks. That 
accounts for about 10 to 15 percent of the volume on the 
Ambassador Bridge.
    I would just like to end by saying the continued 
implementation of the ACE program for Customs, the Automated 
Commercial Environment, as well as improving the operations, 
the impact on infrastructure security and cost of the new 
program such as this Western Hemisphere travel initiative 
should be clearly understood. It is important that the 
Committee consider these factors and that we maintain 
flexibility to ensure cross-border business travel as well as 
cross-border trade. Thank you.
    [Mr. Cook's testimony may be found in the appendix.]
    Chairman Manzullo. Thank you.
    Maybe we could have our staff prepare a place there for Mr. 
Zemsky. You want to put his name tag there and then when he 
comes in direct him to have a seat.
    Our next witness is Tom Chestnut, President and CEO of AAA 
of Western and Central New York representing almost a million 
members over 25 counties. AAA is also, I think, the largest 
travel agency in the United States. Tom is also an avid 
basketball fan. He used to work for the Cleveland Cavaliers. Is 
that correct?
    Mr. Chestnut. Yes.
    Chairman Manzullo. Okay. You are tall enough. Okay. You 
played basketball in Europe, didn't you?
    Mr. Chestnut. Yes.
    Chairman Manzullo. Okay. Probably against the short 
Sicilians like me. We look forward to your testimony. Thank 
you.

 STATEMENT OF MR. THOMAS CHESTNUT, AAA OF WESTERN AND CENTRAL 
                            NEW YORK

    Mr. Chestnut. Thank you very much. Good morning, Chairman 
Manzullo and members of the Committee. Thank you for the 
opportunity to appear before you today to discuss the potential 
impact of the Western Hemisphere travel initiative. Our company 
is the 12th largest AAA club headquartered in Buffalo 
representing nearly 900,000 member motorists in upstate New 
York providing automotive, travel, and financial services.
    We are not only a member services organization but we are a 
medium-sized business in the travel and tourism industry 
located on the northern border. We are very interested and 
involved in the economic well being of the communities we 
serve.
    The seamless border that has been driving commercial and 
tourism development and job growth on both sides of the Niagara 
River should not be threatened by the requirements of this 
initiative. Tourism and casual travel between Canada and the 
United States for entertainment, shopping, and cultural events 
are critical to the vitality of our region, an area whose 
economy is already challenged by a variety of forces.
    How important is this cross-flow of people? Consider that 
travel and tourism is one of the largest employers in New York 
State accounting for nearly 400,000 jobs. Last year Canadians 
visited New York State over 2 million times and spent almost 
$500 million. A disruption of this flow could be catastrophic.
    A good example of the Canadian's desire to visit the United 
States is the fact that the Canadian Automobile Associations' 
Central Ontario Automobile Club does about 100,000 TripTiks 
annually with 70 percent of those travel routings being to the 
United States.
    Canadians want to visit our country and we very much want 
the market to make that happen. Our border is unique since we 
actually try to stimulate cross-border traffic. We must ensure 
that any program balances security and economic issues 
appropriately.
    An illustration of the casual travel that happens between 
Canada and the United States in our area is that approximately 
15 percent of the attendance at home games of the NFL's Buffalo 
Bills and approximately 20 percent of the fans at NHL's Buffalo 
Sabres games are Canadians. Rumor has it that when the Toronto 
Maple Leafs play that gets up to 50 percent.
    As important as travel and tourism is to both countries, it 
is also very fragile. Consider that cross-border trips have 
fallen 20 percent since the tragic events of 9/11 due to wait 
times, hassles, and perceptions. Confusion over further 
changing of regulations will cause an additional decline. We 
know that travelers want ease of mobility. We believe that 
border regulations should facilitate safe and efficient 
movement of travelers. The agencies must strike a balance to 
avoid procedures that discourage leisure travel.
    Specifically, the requirement that people show a passport 
is problematic since it threatens this mobility. The concern is 
that a passport is a special travel document that most North 
Americans do not possess. Only 20 percent of American and 40 
percent of Canadians have a passport. Interestingly, only 30 
percent of Congressmen have a passport. Cost and processing 
time are disincentives to obtaining a passport.
    In conclusion, we believe the following should be 
considered. Programs currently in place to manage frequent 
cross-border travel such as NEXUS should be continued. The 
agencies need to work with existing forms of identification 
that have a broad application such as driver's licenses and 
birth certificates which are identified by the REAL ID Act of 
2005. The Act may provide an opportunity to accommodate the 
initiative without requiring frequent cross-border travelers to 
obtain passports.
    The establishment of an advisory task force representing 
experts from stakeholder groups including tourism should be 
considered to study the regulations and to recommend solutions 
to the executive branch in Congress. At this hearing today 
experts from manufacturing industries are talking about the 
importance of Just-In-Time delivery of goods. No matter what 
system you have designed to facilitate delivery, they are only 
as effective as the ability of trucks to actually cross the 
border.
    If the proposals are implemented, trucks could be sitting 
in long lines of frustrated travelers trying to cross the 
border without passport. This proposal threatens both travel 
and trade industries. Mr. Chairman, thank you for your efforts 
to get a travel and tourism industry perspective, an industry 
critical to our nation's economy.
    [Mr. Chestnut's testimony may be found in the appendix.]
    Chairman Manzullo. Thank you. I guess my first question is 
for you, Mr. Chestnut, and that would be about the statement 
that is at the bottom of your first page. It says, ``Consider 
that cross-border trips have already fallen 20 percent since 
the tragic events of 9/11 due to wait times, hassles, and 
certain imperceptions.'' Can you quantify that? Is there a 
study on that or is it raw numbers you are looking at? What is 
the source of that?
    Mr. Chestnut. I will have to get back to you on the source 
of that particular number. However, we do have documentation 
for all the numbers.
    Chairman Manzullo. Okay. Just by raw counts you could do 
that. Okay. My next question is for Mr. Cook at Chrysler. All 
you have to do is tell me the models of those three cars being 
manufactured in Belvidere but that is a secret. At least at 
this point. Mr. Cook, you had mentioned on the last page of 
your testimony where it says ``future trends.'' Do you see 
that?
    Mr. Cook. Yes.
    Chairman Manzullo. It says, ``Multiplicity requirements for 
OEMs, suppliers, carriers will add confusion and congestion to 
borders that do not have the infrastructure to support long 
delays in the customs and immigration processing.'' You also 
put in there at the beginning, ``Even though it is difficult to 
predict the future, it is highly likely that the auto industry 
is going to be more competitive as new entrants from developing 
countries try to penetrate the North American market.''
    Well, China is making a new car. I am trying to think of 
the name of it. The Cherry. They have been sued by GM in China. 
They plan to send a million of those to the United States each 
year. That would be about 1/17th of the automobile market. Is 
that what you have reference to is hurting the competition?
    Mr. Cook. That is correct. What I reference here is it is 
easy for a foreign manufacturer to ship a full vehicle into 
Long Beach or into Baltimore. It is a finished vehicle that 
goes directly to market. It is not so easy to build cars and to 
have to move from suppliers resident in Canada or Mexico into 
an assembly plant or in the U.S. into a Canadian assembly 
plant. It is very easy to build a car overseas and ship a full 
finished vehicle into the U.S.
    Chairman Manzullo. Okay.
    Mr. Cook. There is not many barriers to that.
    Chairman Manzullo. Okay. Then with regard to the Belvidere, 
Illinois facility could you do that supply chain again? 
Remember you said that something will be done in Canada and 
then shipped to Illinois?
    Mr. Cook. Exactly. There is a metal stamping company in 
Windsor that will produce body stampings for the Belvidere 
assembly plant. Because of the volume of that assembly plant, 
nearly 1,700 vehicles per day, it is going to require that we 
make eight truckloads per day from that Windsor, Ontario area 
supplier to Belvidere. The exact route is timed with a window 
at 8:00 a.m. and 10:00 a.m. and 11:00 a.m. that he ships eight 
times per day over three shifts. Then there will be the receipt 
in Belvidere, Illinois for that.
    Chairman Manzullo. So those will be stamped components.
    Mr. Cook. Will be a stamped component. Right. There is not 
enough capacity in the Belvidere stamping plant or in the 
region to build that kind of component so we--
    Chairman Manzullo. You might talk to me about that. I might 
be able to help you out. Appreciate that.
    I am going to defer to Mr. Zemsky. You got in late. Are you 
ready to proceed with your testimony?
    Mr. Zemsky. Yes, sir.
    Chairman Manzullo. Would you like a glass of water or a 
minute to sort of collect yourself?
    Mr. Zemsky. No, no. I am good. I should apologize. We had a 
little unexpected lake effect snow in Buffalo and they couldn't 
find the plane.
    Chairman Manzullo. Okay. You are here and that is all that 
counts. The way it works is there is a clock in front of you, 
Mr. Zemsky, that says green which means go. When it gets to 
yellow it means you have one minute left. When it says red it 
stops for a total of five minutes. Are you sure you are ready 
to go?
    Mr. Zemsky. I am sure.
    Chairman Manzullo. All right. Let us do it. Mr. Zemsky is--
you have already been introduced by your Congressman, Mr. 
Higgins.
    Mr. Zemsky. Great.
    Chairman Manzullo. Also from Buffalo. You represent Taurus 
Partners which does a significant amount of work in real estate 
development in the Buffalo area. Your entire written testimony 
will be made part of the record. Our concern here today is for 
you to tell us as much as possible your own personal story as 
to the impact of the border crossings and any impact on that as 
a result of increased security. Go ahead.

     STATEMENT OF MR. HOWARD ZEMSKY, TAURUS PARTNERS, LLC.

    Mr. Zemsky. Good morning, Chairman Manzullo, Ranking Member 
Velazquez, members of the Committee. I am honored and pleased 
to have the opportunity to testify before the Small Business 
Committee. Buffalo is a patchwork quilt of small businesses, 
home of precisely zero Fortune 500 headquarters. Small 
businesses are our backbone.
    I am personally engaged as the principal of several small 
businesses on both sides of the U.S./Canadian border and I 
bring that personal perspective to the discussion. I am also 
here today representing a number of organizations in western 
New York, the Director of the Greater Buffalo Partnership, our 
region's largest business association, representing literally 
thousands of small businesses.
    I also represent Buffalo Place, a not-for-profit 
organization dedicated to enhancing the economic health and 
quality of life in downtown Buffalo. I serve on the board of 
Buffalo State College. I am Director of the Binational Tourism 
Alliance, a not-for-profit entity dedicated to reducing the 
barriers along the Niagara River border crossings.
    I suppose if you are looking for a silver lining in the 
WHTI process to date, we have finally found the one issue that 
has seemingly managed to unite virtually all public and private 
organizations on both sides of our border in the Niagara 
region, no easy task.
    It speaks to the enormity of the issue for all of us in the 
Niagara region. We are extremely concerned that the manner in 
which WHTI is implemented could have a depressing effect on our 
economies and our way of life. We are a binational region. The 
Niagara River lies at the center of our binational region, not 
at the perimeter. We see it as a river more than a boundary or 
a border. It is a river in the way the Potomac is a river. You 
cross it during the course of your day or week and some of you 
cross it often.
    In order to paint the proper picture for you, imagine 
requiring a passport to cross the Potomac River. That is how 
integrated our binational region is. The health of our cultural 
organizations, many of our colleges and universities, our 
shopping centers, our professional sports teams including the 
Buffalo Bills and the Buffalo Sabres. At our Sabres games we 
stand and we sing the Canadian National Anthem and then we sing 
the American National Anthem. It is just integral to our 
region.
    We literally live, work, and play on both sides of the 
river. Tourism is such a central part of our economy that when 
you diminish the flow of people across the border, you diminish 
our economy and a large portion of our small businesses.
    There was a time in Buffalo's history when our geographic 
location along the east/west axis was strategic to us. In the 
modern era it is our geographic location along the north/south 
access that is so vital to our present and our future. About 4 
million Canadians visit New York State on an annual basis, many 
hundreds of millions of dollars of impact. The majority comes 
from Ontario, our northern neighbor.
    Our economies are inextricably linked and interdependent 
and that is particularly true of the trade and tourism 
relationship between Ontario and New York. For the past many 
years in western New York we have been building a tourism 
economy based on the foundation provided by the millions and 
millions of visitors to Niagara Falls. In our region on both 
sides of the border projects that are recently completed are 
under development related to tourism total $2 billion.
    We have invested or are in the process of investing $100 
million on bridge upgrades between the two most popular bridges 
in our region, the Peace Bridge and the Queenston/Lewiston. We 
are years down the road of designing potentially a new 
signature bridge connecting Buffalo with Ontario. It is ironic 
that we are both designing a new bridge and simultaneously 
contemplating putting up a metaphoric wall between the U.S. and 
Canada.
    Buffalo is investing hundreds of millions of dollars in 
tourism. We have lost so much of our industrial base and we 
have really, really embraced tourism as the new economy for our 
area.
    The greater Toronto area has over 6 million people. It is 
the 6th largest urban area in North America and it is right at 
our doorstep. Additionally, seven million Canadians, about 25 
percent of the country's population, live within 100 miles of 
the greater Toronto area. The population is expected to grow by 
100,000 annually. The growth of the GTA is the true bright spot 
in our binational region and stands in some contrast to our 
local western New York economy.
    In our region we have to be thinking about how we can 
safely facilitate more trade and tourism with Canada and not 
putting up walls and restricting trade and tourism with Canada. 
The passport requirement obviously concerns us knowing that 
fewer than 40 percent of Canadians and 25 percent of Americans 
have passports.
    We know from consumer research passport requirements would 
restrict trips across the border severely. We want to emphasize 
with equal or perhaps greater weight that we are no less 
concerned, and perhaps more concerned, that another new form of 
ID may be proposed. This ID would like be confusing and no less 
a barrier to tourism.
    Much of the travel to our region is spontaneous motor 
trips. We have already experienced diminished tourism as a 
result of the ongoing confusion regarding WHTA. We urge you to 
continue to take the time to find a way to use modern 
technology to enhance current IDs such as driver's licenses.
    This is obviously a binational relationship that is the 
most peaceful and economic in the world. It would serve us all 
well to be patient and to be collaborative so we don't turn the 
war on terrorism into the war on tourism. It is the many small 
businesses in our region that will bear the burden.
    I want to thank Chairman Manzullo and Congresswoman 
Velazquez for holding this hearing and for giving me the 
opportunity to present this testimony.
    [Mr. Zemsky's testimony may be found in the appendix.]
    Chairman Manzullo. I want to thank you.
    Ms. Velazquez.
    Ms. Velazquez. Mr. Chairman, I would like to yield my time 
to Congressman Higgins since his district is one of the most 
impacted by this proposed rule.
    Mr. Higgins. Thank you very much Ranking Member Velazquez 
and Chairman for your leadership again on this issue. Thank you 
all of those who have travelled from their various areas 
including especially the people from Buffalo and western New 
York to provide this important testimony.
    I think what you have heard here is something that is very 
clear and compelling, and that is that something that was 
advanced to address a general problem is having a specific and 
severe adverse impact on certain areas, particularly between 
the northern border communities of this country, in particular 
western New York.
    My personal observation relative to western New York and 
southern Ontario at the Peace Bridge is that the two 
communities of western New York and southern Ontario have been 
friends for over 100 years. Our economies are interdependent. 
Our life qualities are interdependent.
    It seems to me, particularly in this day and age of 
explosive and unlimited information technology, Governor Engler 
had made specific reference to dealing with a form of 
identification that we already have, that being the driver's 
license and being able to verify citizenship, being able to 
verify country of origin, being able to use that piece of 
information in an enhanced way to address what we are trying to 
address here with respect to this passport requirement.
    We have already seen in Buffalo and western New York not 
only because of the physical barriers between commerce and life 
quality between the United States and Canada, but now a 
proposed administrative barrier, a drop off in business between 
our two countries at that border. It is something that we 
cannot sustain. It is something that I think the problem can be 
addressed in a much more efficient and effective way without 
imposing a very severe additional barrier between the United 
States and Canada.
    One question I would like to ask of Governor Engler. You 
had made reference to an initiative in your state relative to 
the driver's license that perhaps would offer a prescription 
for what it is we are trying to address here.
    Mr. Engler. Thank you, Congressman. I am happy to respond 
to that because there is great interest on the part of the 
Michigan Secretary of State, Secretary Terry Lynn Land. I know 
that she has talked, as I have, with officials in Ontario and 
there is great interest in Ontario in the Canadian part in 
trying to harmonize. What happens with Michigan and Ontario is 
we have five border crossing points in my own state of Michigan 
with Ontario and to even get it down to some of the same 
technologies there is this conversation.
    Part of the frustration, I think, from the state level, 
what is the purpose of the REAL ID Act? Where are we going with 
that? We have so many different pieces of new identification we 
are creating, friends with the trucking world and the business 
world. We have TWIC cards eventually that are out there. We 
have all of these different ways. What you have just 
articulated is something that I am very supportive of.
    How do we create a piece that we can kind of carry around 
with us that has multiple purposes? Maybe it is a voluntary 
thing if we want the minimalist driver's license or personal ID 
card. We have seniors who just don't drive anymore like my 
mother who has a personal ID card. The state issues it sort of 
as a replacement ID card. She doesn't need all of this other 
stuff perhaps but I would like to have that card work at the 
airport as well as at the border. Why not have it work easier?
    Then if you can take most of us whose identities can be 
established who are happy to provide biometric, we will do 
whatever you want. Just somebody in the federal government has 
to tell us what you would like to have and sort of make up 
their mind. I mean, we are four years after 9/11 and we still 
don't have a transportation worker card out there yet. Part of 
it is nobody in an agency wants to make the final call because 
they might be wrong at some point in the future so we don't do 
anything. That is clearly worse than trying to get it right.
    Chairman Manzullo. Thank you.
    Mr. Poe.
    Mr. Poe. Thank you, Mr. Chairman. I want to welcome all of 
you here today. I am from the opposite end of the United States 
down in Texas. I do have in-laws that live in Niagara. We have 
overcome the language barrier and are able to communicate 
without an interpreter any longer. Thank you for being here.
    A couple of comments and then I have some questions. It 
seems to me that it is absurd to have multiple documents to 
cross into the United States from either border, baptismal 
certificates, driver's licenses, all of these different 
documents, but yet we accept those in spite of the 9/11 
Commission.
    Down on the Texas border when we talk about entry into the 
United States, Laredo is the No. 1 inland port in the United 
States. 7,000 to 10,000 trucks a day come into Texas from 
Mexico. About that many go the other direction. I am not 
unfamiliar with the issue of commerce. I am a big supporter of 
small business, especially the trucking industry. It seems to 
me there are three issues. One, the frequent commercial travel 
of trucks, for example, every day.
    Then we have the frequent citizens from either country 
coming into the United States on a daily basis crossing several 
times a day. Then you have the infrequent travelers that come 
into the United States. All three of those are really issues 
that we have to find a solution to on lawful entry into each of 
those countries.
    My question first, Mr. Zemsky, what is your solution to 
border crossing identification security? Very briefly what 
would you say would be the solution?
    Mr. Zemsky. Well, from the standpoint of ease we would 
agree that it should be a piece of identification that people 
otherwise carry with them. If there was a way of enhancing a 
driver's license to the extent to which it would suit that 
purpose, we would be very much in favor of that. I think of 
Canada and the U.S. as having 4,000 miles of shared border.
    It is hard for me to understand how gumming up 30 yards of 
our bridges is going to really do that much for our security. I 
think the same policy ought to be in effect for the northern 
border as the southern border. I am not familiar at all really 
of consequences with the issues of the southern border and the 
complexity of that.
    I live a mile from Canada and I am very familiar with the 
issues related to the northern border. It is a culture that we 
have so much in common. We literally live on both sides of the 
border. We work on both sides of the border. We have businesses 
on both sides of the border. We cross that border like you 
cross the Potomac River. It is that integral to our region.
    Mr. Poe. Thank you. Another question for Ms. Kephart. 
Passports don't discriminate. They are not subject to the 
discretion of the border guard that looks into the vehicle and 
makes the determination based on somebody's affirmance that 
they are American, Canadian, or Mexican National which is all 
that is required at some of our border crossings.
    Why would you suggest with the 9/11 Commission making the 
recommendation of passports that provision in the 9/11 
Commission's report that has been ignored having passports, I 
guess for political reasons, why do you recommend passports 
over all these other types of multiple documents?
    Ms. Kephart. Okay. A couple of things. Just to make it 
clear to the others on the panel, it is my understandingthat 
NEXUS, FAST, Century Border Crossing Card, and the new North 
American Travel Card will be considered an equivalent to the 
passport. The new North American Travel Card will be an 
equivalent to a passport you can carry with your driver's 
license which may solve some of your problems.
    But the passport is a federally issued document. It can be 
backed up by diplomatic security when it looks for fraud. It 
can be checked against national security databases. It is, in a 
way, the hundreds of birth certificate issuing authorities, the 
state driver's licenses all have different requirements. They 
can't be authenticated. They can't be verified.
    This puts the border officer at checking everybody instead 
of just having a passport to check. The passport just to check 
means that is all the border officer is looking for. That 
facilitates people through quicker. He knows what he's looking 
for. He knows forensically what to look for. That is a 
facilitation means and a security means all at the same time. 
You get your whole kit and caboodle at once.
    Mr. Poe. Plus in a passport it has a bar card and you can 
record who comes into the country.
    Ms. Kephart. Right.
    Mr. Poe. Now we don't record who comes into this country.
    Ms. Kephart. Right. You have a U.S. VISIT activity there 
when we get U.S. VISIT down at the land ports of entry. Thank 
you.
    Mr. Poe. Thank you.
    Thank you, Mr. Chairman.
    Chairman Manzullo. Congresswoman Bordallo.
    Ms. Bordallo. Thank you very much, Mr. Chairman. I am sorry 
I was a little bit late so I didn't hear everyone's testimony. 
I think the gentleman, my colleague, from Texas mentioned he is 
far away. Well, I am even further. I represent Guam. It is a 
U.S. territory in the Pacific about 10,000 miles from the 
Canada/U.S. borders that we are discussing today. We, too, are 
very concerned in my particular about tight security around our 
shores.
    I am curious is the current NEXUS system something that you 
approve or would you like to see changed and in what way? 
Guam's economy is tourism very much like New York. Another 
thing that I am very concerned about is about 80 percent of our 
goods come in from the United States so you are talking 
containers.
    I probably would like to ask you first, Ms. Kephart, what 
assurances--do you agree with the NEXUS system? Could it be 
upgraded? Are there things that you think would be much better? 
We are concerned about terrorism on Guam. We are neighbors to 
the Philippines and the other areas where terrorism--you know, 
there are terrorist cells. I am just curious what should we be 
doing that we are not doing today?
    Ms. Kephart. Okay. In terms of NEXUS, my understanding in 
talking to the folks who have worked on the simulation models 
for facilitating commerce through the ports of entry and others 
is that NEXUS is working extremely well. There is never a 
guarantee on our borders. There is never a guarantee, you know. 
No terrorist has a T on their forehead. Anybody can get through 
if they want to try really hard to do.
    What we have to do is manage the risk. NEXUS and FAST and 
Century and the Border Crossing Card and the State Department's 
new North American Travel Card which they say they will be 
offering, are ways in which we can facilitate those through who 
we don't consider to be high risk. Those are very good programs 
because then you are calling out the lower risk folks. You can 
focus on the newer travelers, the higher risk.
    My understanding is the RFID technology, the radio 
frequency technology, is working extremely well. I don't know 
what the other gentlemen here think who have experience with it 
every day but that is my understanding from sort of the 
Government side and from the private industry who is producing 
those technologies.
    Ms. Bordallo. I would like to ask the Governor if you would 
comment on that. Are there ways that we could improve this 
system or is the system working?
    Mr. Engler. I think there are ways to improve it. I have 
never actually seen a NEXUS card. I don't know if anyone in the 
room has one on their person.
    Ms. Kephart. I have one right here.
    Mr. Engler. Is it yours?
    Ms. Kephart. I got it sent to me by the committee who 
produces them actually.
    Mr. Engler. The vendors are having a field day but I am 
just not sure--
    Ms. Bordallo. Are there NEXUS lanes?
    Ms. Kephart. Yes. I talk about it in my testimony.
    Ms. Bordallo. Yes.
    Mr. Engler. Where I think we need to go, let us try to 
level set this. The TWIC card, which is finally coming along, 
that is for transportation workers at large. That is sort of 
a--I don't know if that is FAST plus just to try to sort that 
out. There are three different cards and then there is a 
hazardous endorsement and the commercial driver's license is 
what we started with.
    That is what states use to issue to truck drivers and bus 
drivers, etc. All I think we would like to see is just simplify 
this. Just some straightforward systems. Tell us what 
information you want sort of like at the airport. What do you 
need from us so we know who the travelers are and let the 
frequent travelers move more rapidly through the system.
    You are all frequent travelers. Let us cut out the lines 
where we can so that TSA can focus on the risk where it can be 
found and not try to--the way I look at this if we are trying 
to reduce risk, you want the frequent and the--we have 3,000 
Canadian nurses that work in southeast Michigan pretty much 
every day.
    They are coming back and forth. They are going to come 
every day. It is the same person. We are going to get to know 
them. The truck drivers driving that DiamlerChrysler truck is 
making four runs a day across the border and we are getting to 
know them.
    Let us figure out how we can get those people over and then 
the person we have never seen before who shows up in a truck 
carrying something that we don't know what is in the back of 
the truck, maybe that is where we ought to spend 10 minutes 
with them and 10 seconds with the other. I think today it is 
just not as rational as any of us would design it because 
everybody is designing a piece of it and the pieces don't fit 
very well.
    Mr. Staub. Just to support the Governor's contention, I saw 
the statistics somewhere in the comments that 2 percent of the 
people crossing the border constitute 80 percent of the 
movements. I mean, that tells you right there what you have to 
concentrate on.
    Mr. Engler. Thank you, Mr. Staub. The gentlelady's time has 
expired.
    Ms. Bordallo. Just one more question. Personally I really 
feel that in reading about this NEXUS program that it would be 
very helpful but I just wondered if there was something that 
you would like to impart to Congress that we could improve it 
even more.
    Mr. Engler. Maybe we should ask the person from Homeland 
Security Commission. It seems to me we need to work with our 
state officials. Some of these programs actually could be--
there could be a form of joint delegation. In other words, who 
has to check what? Is it a federal official? Is it an FBI 
agent? Can it be a state policeman? Who checks what? Once that 
is done, how can somebody issue? In other words, just sort that 
out and tell us who.
    I mean, we can use local law enforcement for part of this 
working with federal agencies. It is supposed to be a seamless 
integrated law enforcement system today. If I took my passport 
in and showed it to a state official, could I put my passport 
on my driver's license? Would that be helpful? It really just 
needs somebody to make some decisions.
    Ms. Bordallo. Yes. Thank you, Governor. Does it take time 
to issue this NEXUS card? That is what I am curious about.
    Mr. Zemsky. It does take time. I have a NEXUS card. I 
travel across the border all the time. First of all, the irony 
is you have to go across the border to get the card to get you 
across the border and you have to interview. It is really quite 
a long process. It is not easy or simple. It is not like going 
to the post office and getting another form of ID of any kind. 
It is used extremely infrequently.
    Ms. Bordallo. Time frame?
    Mr. Zemsky. It took a while to schedule the interview and 
get a call back from the people, go over to Canada and get 
interviewed and then get it issued. I mean, it was months. The 
other thing--
    Chairman Manzullo. I am going to have to cut you off and go 
to Mr. King because he has to run to an Immigration 
subcommittee hearing.
    Mr. King. Thank you, Mr. Chairman. It is ironic that we 
simultaneous Immigration hearings going on here. I sit on the 
Judiciary Committee and the Subcommittee on Immigration which 
is going on now talking about the southern border so I am 
anxious to get over there. I very much appreciate everybody's 
testimony here. I can feel in a sense the impact on the 
economy.
    Particularly, Governor Engler, I want to thank you for 
being here. In your testimony the one thing that you said is, 
``Make a decision and stick with it.'' It is true that there is 
a scattered approach to this. We thought when we eliminated 
American passport exception that we had made a decision. I 
think there was an administrative decision not to burden people 
with the difficulty of crossing the border with a passport. 
Therefore, we have some of these other alternatives that are 
here.
    Just some thoughts that come to mind as I listen to the 
testimony, one is if you go to Ireland and a baby calf is born, 
when it hits the ground and a veterinarian shows up out there, 
tags its ear, and gives it a passport. It is not a swipable 
passport. It is a passport that requires the veterinarian to 
write in that in ink each time that calf moves from pasture to 
pasture or location to location. That is one measure of 
difficulty that they have and they are still raising calves and 
doing business.
    Another thing that occurs to me is our perspective here is 
the economic impact. I would submit that if we were sitting 
here and this testimony today was testimony to the Keneset in 
Israel and our perspective was the United States being Israel 
and any of the surrounding countries being West Bank, Gaza, or 
any of their neighboring countries there, that there wouldn't 
be anyone sitting here at this panel advocating the things we 
are advocating here today.
    I think of it in terms of how do we get to the point of 
getting the enforcement and the security we need at the border. 
Do that part first and then address how we then start to make 
accommodations for the very real economic needs that you have. 
That is our difficulty here in Congress. That is why we have 
other alternatives. That is why we had so much difficulty 
passing the REAL ID Act because we didn't start with security 
first and then open up our economics.
    I would also submit, Governor Engler, I know this by 
experience. I lost my passport in Jamaica so I can quote the 
federal statutes that allowed you to come back into the United 
States twice from Canada and that is you have to make a 
credible allegation of United States citizenship. That was the 
standard that we are trying to improve upon.
    Another thing that occurs to me is that if members of 
Congress only 30 percent have passports but American citizens 
25 percent do, that seems to not quite fit with what I know. 
Where I get to is this. The standard for getting a driver's 
license first time in Michigan, Governor, what do you have to 
produce in order to qualify for a Michigan driver's license, 
say, as a 14-year-old or whatever age it is for a learning 
permit?
    Mr. Engler. I think it is pretty minimal. It probably is a 
birth certificate, completing a driver's license course, that 
kind of thing. If I might respond to the major point about--
    Mr. King. I thought you wanted to.
    Mr. Engler. I would love to. First of all, on the Irish 
example the TSA has the cattle part down real good. They just 
don't have the ID part worked out yet. I think with Keneset we 
would be able to do the same thing here. In other words, I 
think most citizens are happy to reach any level of assurance 
or security that people want. Just tell us what it is and let 
us do it one time.
    I mean, most of us can qualify on this. I think the lengthy 
interviews causes long delay but let us go in somewhere once 
and establish--part of the REAL ID Act has been a bit if 
hysteria about a national ID card. We kind of don't want to 
have a national ID card but we know we need one so we are 
trying to figure out how we can have one without call it such 
so we come up with multiple means of doing that.
    For those of us who don't mind, let me have a damn card so 
I can do my travel. Let General Motors say to all their people 
and let Daimler say, ``Look, this is the kind of card you are 
going to have to have as an employee here. We will do this on 
the front door on the way in.'' Set the security bar high. It 
is fine but then let us qualify and get it over with.
    Mr. King. Thank you, Governor. I am watching this clock 
tick here. I would just submit that a requirement of birth 
certificate and the other available ID that is required to get 
a passport the first time is pretty close in most states to the 
same standard to get a driver's license the first time. The 
difficulty of achieving qualifying for a passport is 
essentially the same.
    Mr. Staub, in your testimony, and you are my kind of guy. I 
change the tires and dispatch loads and get behind the truck 
and come testify before Congress. I mean, that is the America I 
know. Is there any check on the loads that you have, your van 
trailers, reefers? What happens when you cross the border with 
those? Does anybody go back and check that load? You mentioned 
that you present a driver's license.
    Mr. Staub. Well, it would take a half hour or more to 
explain that program because you get into C-TPAT and things 
like that and whether they are FAST qualified. FAST by itself, 
the FAST card, is only part of a process. The importer has to 
go through a certification process and the carrier. The 
transiting carrier has to go through a process also. When you 
get all done with that, the FAST card is still not a travel 
document.
    Unless Homeland Security changes their opinion of what the 
FAST card is right now, the driver is still going to have to 
have a supporting document to take and prove citizenship and 
identity. Now, what will that be? The good thing about the 
driver's license, the enhanced driver's license, REAL ID, would 
be that you have it in your back pocket.
    If you have a passport and you drive a truck and you have 
two cars, where is that passport going to be? You are probably 
going to leave the country, come back, and at some point in 
time that passport is not going to be with you but your 
driver's license would be. My credential of choice would be the 
REAL ID but I agree with the Governor, you know, we have to 
fish or cut bait.
    We have to try and figure out which way we are going and go 
there. The important thing is disseminate that information to 
all border points because the confusion you can see right in 
this room. Can you imagine the confusion at the border points 
as to what credentials are or are not accepted.
    Chairman Manzullo. Thank you, Mr. King. Mr. McCotter.
    Mr. McCotter. Thank you, Mr. Chairman. I come from a 
district in the northwest suburbs of Detroit in Michigan. As 
Governor Engler pointed out, I would often go over to Windsor 
to shop but it is not just a local issue for my district. 
Everyone in Michigan has visited Canada at one time or another 
or has a business relationship with our Canadian neighbors. In 
fact, people have been known to drive from as far away as Beal 
City in their Oldsmobiles to catch a matinee at some of 
Windsor's more intimate venues.
    My question is knowing that, I also listened to 
Representative Poe and it becomes evident we have two borders 
in this country, two long borders with two distinctly different 
neighbors. One is a highly industrialized democracy and the 
other is a developing democracy that is struggling in many 
ways.
    I come from a state with a border. We have multiple 
crossings and very little difficulty with illegal immigration. 
Mr. Poe comes from a state that has a very difficult time with 
illegal immigration from his neighbor. The arguments that we 
hear for and against what we are trying to do seem to fall upon 
the crux and we never get any traction because we are trying to 
address two entirely dissimilar borders, two entirely 
dissimilar problems and we are trying to do it in one piece of 
legislation.
    When you hear his concerns you have to understand those are 
legitimate concerns. He has a concern for a passport. Our War 
of 1812 ended. We are done with that I would think. But the war 
against illegal immigration continues and it strikes me that we 
have to be honest about that before we can proceed.
    Then if we are honest about that we have to find a 
mechanism by which we can accommodate both borders' pressing 
problems effectively. It would seem to me as a working thesis, 
I suppose, working theory that one of the things we could look 
at is the potential for a bilateral treaty with Canada to 
rationalize our transborder crossings.
    That seems to me that would avoid some of the 
constitutional problems we may have with the actual creation of 
a state generated document with national identification on it. 
It would seem that we could then harmonize through the 
constitutional way the treaty would provide with our Canadian 
neighbors because we wouldn't have to have reciprocity in terms 
of what comes across the border into their country vis-a-vis 
what comes out of ours and back in.
    Yet, it would still leave us able to deal with the pressing 
problems of the southern border in an entirely different matter 
through statute or perhaps another bilateral treaty. I just 
throw that out for food for thought because that is one of the 
things we keep running up against.
    Secondly, one of the things that you learn from living in 
Detroit is that during the bootlegging era you could not secure 
that border. You could cross that border in a canoe. You could 
that border in a Speedo if you are as athletic as the Governor. 
It is impossible to totally close that border from people who 
want to break the law and come in. In the end we have to be 
ever mindful that whatever path we take the people who are 
going to feel probably the biggest brunt of what we do through 
statute, through law, are the people who are honorable enough 
to follow it.
    I would like that to be a consideration. I would like to 
conclude with something the Governor has talked about and as a 
former state legislator who was honored to serve with the 
Governor when Michigan had an unemployment rate below the 
national average and was attracting business, the heyday.
    There is a lot of wisdom in state government that gets lost 
when we get here. At least in my case. I think we should work 
very carefully with our state and local elected officials from 
the communities along the border to come up with this idea. 
This should not be a federal decision made in a vacuum. I thank 
the Chairman for having this hearing and for bringing this 
distinguished together.
    Chairman Manzullo. Thank you. I have some more questions. 
First of all, Mr. Cook, Rockford Toolcraft has a brand new 28-
foot Minster 1,000 pound stamping press, the Heviblanker. It is 
the first one to have a cast iron bed that Minster has ever 
made. It is made in Dayton, Ohio, Mr. Turner's district. If you 
could give that to him.
    We set up in Rockford calling it the Manufacturing Alliance 
of Rock River Valley and also the McHenry County Manufacturing 
Alliance of Fox River Valley. They are two manufacturing 
alliances that are trying to bring together over 2,000 
factories, much on the order of the Lombardi Group in Milan, 
Italy where I learned that process.
    We have hired a professional engineer in Rockford and we 
are going to hire another professional engineer in Fox River 
Valley for the purpose of furnishing completed components or 
portions thereof by piecing together these different people. If 
you have any needs, talk to me. I will be glad to try to 
fulfill Chrysler's stamping requirements.
    Mr. Cook. Okay. Thank you for the information. I will make 
sure the appropriate--
    Chairman Manzullo. You bet. Then a question both to you and 
to the Governor and anybody else that wants to join in. This is 
the Small Business Committee. We are obviously concerned about 
what happens to the little guys. Ken Staub has been quite 
remarkable in his testimony as to the impact there. Also Mr. 
Chestnut because you have about 600 employees. Is that correct?
    Mr. Chestnut. That is correct.
    Chairman Manzullo. That is a small business as far as I am 
concerned. Up and down the supply chain just in the automotive 
industry any ideas as to how many businesses are impacted, any 
business entities?
    Mr. Cook. No, I don't have the facts at my fingertips but I 
know there is a multiplying effect for the manufacturing 
business. I can certainly get that. Something on the order of 
for every automotive job it is seven to 10 other jobs that are 
created. Maybe the Governor has those facts more readily 
available.
    I know that we do support all sized businesses. Obviously 
we do business with big first-tier companies but in the 
transportation industry in particular we have continued to look 
for small to medium-sized companies that can meet our need and 
grow them into our network. We have grown some fairly small 
companies into pretty good size or medium size firms. We have 
done that over the years as they have accommodated and grown at 
the pace they have grown.
    As I mentioned, several trucking companies that we have 
done business with over the years over the last decade have 
grown from small companies of just a few trucks, a lot of them 
minority or diversity supplier companies. We have very active 
programs that have done a great job in supporting that 
community and growing a $10 million total revenue company into 
$100 million company over a period of years as they are able to 
grow with us and we continue to do that.
    Chairman Manzullo. Governor, did you want to take a stab at 
that question?
    Mr. Engler. Well, I am citing from a document that the 
Detroit Regional Chamber of Commerce put together. I am not 
sure I can get you the numbers. I can get dollars. One 
estimated $1.2 billion in trade daily. It is the most important 
economic dollars anywhere in the world. Forty percent of that, 
$480 million of trade just with the five Michigan/Ontario 
border crossings, and $234 million automotive related.
    That is a daily basis. That is the value of sort of what is 
being trucked back and forth. The number would run into the 
hundreds of businesses impacted. Ontario surpassed a year ago, 
or maybe it is two years now, Michigan as the number one state 
in terms of auto assembly in North America. It had been 
Michigan and the Canadian growth has been pretty impressive.
    All of that is still supported by this incredible back and 
forth all day long trucking of parts and components. There have 
been some good things. I don't wish to be completely negative. 
I mean, on the FAST program at the border I have been up there 
when then Secretary Ridge was there with his Canadian 
counterpart. A lot of work was done--I mean, DiamlerChrysler 
has an interest in sealing a truck when it leaves a supplier in 
Canada and comes across in the Jefferson plant.
    They don't want anybody tampering with that. Nor do most 
people so we can take a lot of the 7,000 trucks that weekly 
cross Ambassador Bridge, Mr. Chairman, that are part of that 
$234 million sort of daily trade, I mean, most of those we can 
account for. The ones that we can't those are the ones we need 
to check. That part of it has been improved.
    We just need to work on the people part. You are correct, 
that does hurt the small business guy more because he or she 
has fewer people back there at the office to kind of take care 
of all this stuff and it surprises them more than it might the 
DiamlerChryslers of the world.
    Chairman Manzullo. Mr. Staub, you had mentioned that the 
present documents that your drivers need cost about $500 a 
driver? Is that correct?
    Mr. Staub. Well, if you had all of the documents, that is 
what they would cost. A FAST card cost $50 U.S. or $70 
Canadian. If you figure the driver's license in there and in 
New York State it is really high. I am adding up all the 
documents.
    Chairman Manzullo. Okay.
    Mr. Staub. If you added a passport in at $97, you get to 
$500 and that is significant for a driver if the driver bears 
the entire amount.
    Chairman Manzullo. One of the things that the State 
Department is trying to do is they are trying to take and 
simplify the present system even if there were no new law out. 
They have been working on this for a long period of time to try 
to get to the ultimate simplification on it. Obviously we will 
have another hearing and we will have several folks come in 
from the Government side of it but it is going to be at that 
point where they issue a regulatory flexibility analysis of the 
impact on the small businesses. That is our jurisdiction. We 
want to know how people like you would be hurt. Otherwise we 
have a tendency without that study to talk in a vacuum and to 
come up with policy in a vacuum so there will be subsequent 
hearings on that.
    Mrs. Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Ms. Kephart, I was interested in your testimony about the 
North American Travel Card. Do you know if the State Department 
and the Department of Homeland Security is going forward with 
such a plan?
    Ms. Kephart. My understanding from speaking with them is 
that they are but if they were here at the hearing today, you 
would be able to ask those questions so I can't really go 
forward with that.
    Ms. Velazquez. That is why in my opening statement I made 
mention about the fact that they are not here. Let me ask you 
since you apparently have access to them and you know what is 
going on, wouldn't it have made more sense for State and the 
Department of Homeland Security to have outlined this plan in 
advance notice of proposed rule making so that commentators 
could look at it and make suggestions? And they have not even 
had time to review a portion of the comments yet, have they?
    Ms. Kephart. I don't know. I know that the comments ended 
on October 31. I believe this has been something in process for 
a while because they have been trying very hard to take into 
account the effect on the northern border communities. They 
know it is a problem. They know it is an issue. That is what 
they have told me. Therefore, they want to talk. I know they 
have been in to see the Chairman's folks in regards to this. 
Other than that you will have to ask them more questions.
    Ms. Velazquez. Sure. But do you agree with me that given 
the testimonies of all these people here they have provided an 
incredible important information about the impact that this is 
going to have in their businesses and in their communities? 
That it really calls for the Department of Homeland Security 
and the State Department to do regulatory flexibility analysis?
    Ms. Kephart. I can't speak to the regulatory flexibility 
analysis on this. My issue is security of the American people 
and assuring border security. That is where I come from on 
this. I believe that we can have the facilitation and security 
together but once you get into the regulatory process, that is 
not really where I am.
    Ms. Velazquez. Sure. I understand.
    Ms. Kephart. I am going to stand back and not answer that 
question.
    Ms. Velazquez. I submitted comments to both the State 
Department and Homeland Security on behalf of myself and the 
democratic members of this Committee. And I also requested for 
them to conduct a regulatory flexibility analysis.
    Mr. Cook, how many of your suppliers are small businesses?
    Mr. Cook. I don't really have an exact figure. What I would 
term as a small business would be probably fairly small 
revenue. I think for a company our size we tend to work with 
companies that because of the capital nature of the business 
can afford to make large expenditures. However, they do employ 
a lot of second and third tier companies that are smaller, are 
family owned, a cleaning service or any kind of service that 
are directly related to the business that we give them.
    Ms. Velazquez. Okay.
    Mr. Cook. A cascading effect. I did find some facts on how 
many jobs we believe a direct job in the industry generates 
something on the order of seven to 10 indirect jobs and that is 
all through the supply chain.
    Ms. Velazquez. Thank you. Governor, you mentioned the FAST 
program and the NEXUS program. Why do you think that we don't 
see more drivers using these programs?
    Mr. Engler. Well, there is a difference. The FAST program 
is full process. The plants have to be certified. The carrier, 
the way the product is being--I mean, literally, as I 
understand it, you seal it at one place and open it--
    Mr. Cook. May I?
    Ms. Velazquez. Sure.
    Mr. Cook. The FAST program is a commercial program.
    Ms. Velazquez. And the NEXUS is for the frequent travelers.
    Mr. Cook. Is for frequent travelers and nonbusiness people 
primarily. The FAST program has stringent requirements. There 
is advance notice that goes to Customs so that the inspector at 
the border exactly knows what is in the load. He has the 
information about the driver as the driver pulls up. The 
company that is involved has to assure that and give that 
advanced information to Customs so there is a lot of up front 
work that needs to be done.
    The whole process that the driver goes through has been a 
lengthy process of interviews and applications. The drivers 
have to qualify. Their whole background is checked. There are 
criminal records on both sides. You essentially have all four 
agencies or four agencies, Customs in Canada and Immigration in 
the U.S. and Canada that have to vet each driver. At any point 
those drivers can fall out of the process and not be certified 
and not get a FAST card. It is a rigorous process for them to 
go through.
    Ms. Velazquez. Mr. Chairman, if I may, just one more 
question.
    Mr. Staub. Just to comment on that, this morning in going 
through some material, older material, looking it over, our 
industry trade publication Transport Topics there is an article 
in there from about a year ago that said that over 50,000 FAST 
card applicants never showed up for their interviews.
    It is a scheduling problem, okay? You have to have this 
driver at an interview at a particular point in time and if 
that driver is not based right at the border, which few of them 
probably would be, you have to arrange for this guy to get up 
there to take his interview but 50,000 drivers didn't show up 
for their interviews. They have a 90-day window to do that. 
They can reschedule the interview.
    Mr. Cook. One of the reasons for that is that he is picking 
up a load in Ontario. He is on a Just-In-Time schedule to 
deliver to an assembly plant. He doesn't have an hour or two in 
his schedule so he may be based in Kentucky or Tennessee. He 
now has to get back to the border potentially to do this 
interview which also is an intimidating process for someone to 
go through.
    Ms. Velazquez. Thank you. Mr. Chairman, I would like to ask 
one last question to Mr. Staub.
    You talk about the different driver's license, the FAST 
card, the NEXUS clearance, transportation workers 
identification. Most of those IDs require a $24 FBI check and a 
host of other fees and this is why you mentioned that it could 
cost close to $500. My question to you is has ATA ever 
approached the Government about consolidating all those 
overlapping requirements?
    Mr. Staub. I am not aware that they have at this point. 
They may have approached it. In a lot of cases, though, these 
cards don't exactly overlap each other. For example, a FAST 
card is a program for expedited processing through the border. 
It is designed to get you through fast. That's why they call it 
FAST.
    Whereas the border crossing card that I am not real 
familiar with is unique to the southern border and it has its 
own special set of circumstances. It is not unique to the 
southern border. It can be used on the northern border. One of 
the expenses in the total cost of the application for these 
cards is the time that the driver loses in going for his 
interview. That is a day's pay so that has to be factored into 
the cost. For a small business it could be significant.
    Chairman Manzullo. We want to thank you for coming to the 
hearing. Mr. Zemsky, you could have come all this way and 
missed the hearing. Have you ever testified before a 
Congressional hearing?
    Mr. Zemsky. No.
    Chairman Manzullo. Okay. Well, I am glad you made it.
    Mr. Zemsky. Thank you.
    Chairman Manzullo. I am glad you all made it. I want to 
thank all of you for coming obviously, especially those of you 
that traveled great distances to come here. This is extremely 
important. We will be have more hearings on this. It is a very 
difficult problem. Let me just say this.
    I have been a member of Congress for 13 years and I have 
never seen agencies involved in an issue, taking as much time 
and patience trying to do the right thing, as I have seen in 
this case. It is absolutely exemplary the quality of the people 
that we are working with in the Government, the time they take, 
the briefings. Every time something changes, they are in my 
office to keep us up to date on it. As I said, we will have 
more hearings on this and obviously they will be testifying. 
The hearing is adjourned.
    Ms. Velazquez. Mr. Chairman, I would like to ask unanimous 
consent to submit for the record the opening statement on 
behalf of Mr. Ray Hobbin.
    Chairman Manzullo. Without objection.
    [Whereupon, at 10:51 a.m. the Committee was adjourned.]

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