On paper, the four categories outlined in Table 2 can appear all-encompassing and broad enough to cover most situations under which firms might need their employees to cross the border for business, trade, or investment purposes. In practice, however, firms still face several challenges when trying to carry out their cross-border activities, as shown in the results of a survey of large businesses with extensive ties across the two countries.11Council for Global Immigration and Canadian Employee Relocation Council, Cross Border Mobility Survey: Service Level Survey . Firms’ challenges can be summarized as two key issues: the difficulties of border officials to interpret and apply existing rules, and the current limitations in the list of professional occupations covered by the agreement.22Shotwell, Yewdell, and Cryne, Barriers to Cross-Border Labor Mobility for Professionals ; Council for Global Immigration and Canadian Employee Relocation Council, Cross Border Mobility Survey: Service Level Survey .
Barriers to the cross-border mobility of business persons can have significant economic costs for two key reasons. First, North American multinationals operating on both sides of the border have a significant economic footprint. As such, affiliates of Canadian-owned firms in the United States employ over half a million U.S. workers and generate annual revenues of more than $300 billion. 33Based on 2014 data from Statistics Canada, Table 376-0065—Activities of Canadian Majority-Owned Affiliates Abroad, by Countries . Conversely, affiliates of U.S.-owned companies in Canada employ over 1.2 million Canadians and generate over $600 billion in revenues.44Based on 2014 data from Statistics Canada, Table 376-0151—Activities of Foreign Majority-Owned Affiliates in Canada, by Country . These North American multinationals have hundreds of employees who regularly need to cross the border for business purposes. Barriers preventing them from carrying on with their day-to-day activities on both sides of the border leads to significant costs and missed opportunities for these firms.
Second, barriers to the cross-border mobility of business persons have important costs in terms of forgone trade in services, whether these services are traded as standalone products or as intermediate inputs. Services such as research and design, professional services, financial services, and transportation and logistics are essential inputs into North America’s supply chains. They are the “connective tissue” of global value chains, powering all steps of the process, from the initial product development all the way to their sales and exports.55The Conference Board of Canada’s Global Commerce Centre dedicated a three-part series to Canada’s services trade. For more information, see Palladini, Spotlight on Services in Canada’s Global Commerce; Palladini, Good Service Is Good Business ; Goldfarb and Palladini, Becoming a Services Superpower .
Traditional measures of trade do not reveal the full contribution of services to the well-functioning of North American supply chains. However, value-added trade data measures developed in recent years have filled this gap. The “value added” concept refers to the amount by which the value of a good or service increases at each step of the production process. In contrast with conventional trade measures, which consider the total value of a good or a service when it crosses the border, value-added trade measures allow for the split between each activity taking place across supply chains.66The Conference Board of Canada published a series of briefings on value added trade measures. For more information, see Armstrong, Adding Value to Trade Measures: An Introduction to Value-Added Trade ; Armstrong and Burt, Adding Value to Trade Measures: Understanding Canada’s Role in Global Value Chains .
When using value-added trade data, we can see how crucial services are to Canadian trade, accounting for as much as 40 per cent of total Canadian exports (compared with 16 per cent when using traditional trade measures).77Palladini, Good Service Is Good Business: How Services Add Value to Canadian Goods Exports , 14. In fact, based on value-added trade data, Canadian services exports in the form of intermediate inputs are 40 per cent larger than our exports of standalone services.88Based on 2011 data from OECD, Trade in Value Added (TiVA) Database . And, close to 60 per cent of Canada’s services exports as intermediate inputs go to the U.S. market.99Ibid.
To be delivered, services often require people to interact with each other. And this is also true for services trade, whether they are exported as standalone products or as intermediate inputs in traded goods. For example, a Canadian architectural firm selling its services to a client in the U.S. (a service traded as a standalone product) may need to send employees south of the border to meet with the client and discuss its needs. Similarly, a Canadian manufacturing company could hire the services of a Canadian consultant to assess its transportation and logistics needs before starting to export its manufactured goods to the United States. To provide that service, the Canadian consultant may need to travel to the U.S. to meet with the U.S. firms that will be importing the goods from Canada. These two examples illustrate how essential the cross-border mobility of business people is for services trade to take place.
To reduce barriers to the cross-border mobility of business people, we propose the following:

Business Visitors: The Need for Clearer Rules

How entry is granted under each of the four categories of business entry depends largely on the interpretation of border officials. A survey of businesses found that border officials can make unpredictable and inconsistent decisions. That can be explained in part by a lack of training.1010Shotwell, Yewdell, and Cryne, Barriers to Cross-Border Labor Mobility for Professionals . However, the lack of clarity for some of these categories leaves too much room for interpretation, making it difficult for border officials to apply the rules consistently and fairly.
For example, the broad “business visitor” category (the only one that allows temporary entry to individuals without them being considered “workers”—includes a wide range of activities that can easily be interpreted as “work” by border officials, including research and design, marketing, and after-sales service.1111NAFTA Secretariat, Chapter Sixteen: Temporary Entry for Business Persons . See “Annex 1603.” Therefore, distinguishing between what does and does not constitute work is subject to much interpretation by border officials and leads to inconsistent decisions.
As such, in a survey of 24 large companies operating in the U.S. and Canada,1212Respondents to the survey were firms with over 1,000 employees in North America. Among these firm, 57 per cent employ more than 10,000. some firms reported that their employees were required to first get a work permit (either as professionals or intra-corporate transferees) before crossing the border to attend business meetings or provide after-sales services.1313Council for Global Immigration and Canadian Employee Relocation Council, Cross Border Mobility Survey: Service Level Survey . Technically, business meetings and after-sales services should count as “business visitor” trips under the sales and marketing and after-sales activities.
Moreover, the same survey also found that, among the various categories of business persons covered under NAFTA, the business visitor category was the one for which border officials’ decisions were the least consistent. For temporary entry to both Canada and the United States, close to 60 per cent of respondents said that decisions for the business visitor category were not consistent, compared with only one-third of respondents for the professional category.1414Ibid. Here are some quotes from businesses who took part in this survey1515Ibid.:
The interpretation of border officials on both sides of the border varies widely depending on the nature of the relationships with the firm in the other party, the accompanying documentation presented at the border, and how frequently a person crosses the border.1616Shotwell, Yewdell, and Cryne, Barriers to Cross-Border Labor Mobility for Professionals ; Council for Global Immigration and Canadian Employee Relocation Council, Cross Border Mobility Survey: Service Level Survey . Therefore, the business visitor category should be clarified in NAFTA 2.0 so that border officials and firms can clearly differentiate those circumstances that require employees to get a work permit from those that do not.

Professionals: Broadening the List of Covered Occupations

The list of occupations covered for temporary business entry under the “professionals” category has not been updated in over two decades. According to businesses on both sides of the border, the fact that the list of occupations is outdated is one of the key barriers to the flow of business persons between the two countries.1717Shotwell, Yewdell, and Cryne, Barriers to Cross-Border Labor Mobility for Professionals . The list excludes a wide range of occupations that have emerged since NAFTA was first negotiated. This is true across all sectors of the economy, but particularly in information technology. These include such occupations as software developers, data scientists, analysts, project managers, supply chain and logistics professionals, and investment managers, to name a few.1818Council for Global Immigration and Canadian Employee Relocation Council, Cross Border Mobility Survey: Trusted Employer Program Survey .
To update this list, NAFTA 2.0 could leverage the work done under CETA.1919For a discussion of labour mobility under CETA, see Brender, Across the Sea With CETA . Instead of relying on a list of occupations that must be clearly stated, CETA lists the actual services for which professionals are allowed temporary entry, based on the Central Product Classification (CPC).2020United Nations, Central Product Classification (CPC) Ver. 2.1 . Services covered by CETA in Chapter 10 of that accord include legal advisory services, accounting and bookkeeping, computer and related services, financial services and consulting services, travel services, research and development services, and other.2121Government of Canada, Text of the Comprehensive Economic and Trade Agreement—Annex 10 . This list is not as closely tied to specific occupations (aside from those that are regulated professions) and could provide more flexibility as new occupations emerge.
However, the sectoral approach proposed in CETA is highly technical and could also be difficult for border officials to interpret. Therefore, other options may need to be considered during the renegotiation of NAFTA to ensure a broader coverage of occupations, facilitate interpretation by border officials, and reduce uncertainty for professionals crossing the border.
Another option could be to opt for a “negative listing” approach in specific sectors, particularly where job titles continuously change—as they do, for example, in information technology. Under such an approach, all occupations in a sector would be covered unless otherwise specified. NAFTA 2.0 could also include a provision allowing for new types of occupations or services to be added to the list on an ongoing basis so as to ensure that the agreement can be updated in the future as technological changes continue to transform business and trade realities.
In turn, a more extensive coverage of occupations under the professionals category would make cross-border travel a lot easier for many North American businesses.
Lastly, two other aspects where the work of CETA could be incorporated into a NAFTA 2.0 to improve labour mobility and support trade and investment outcomes include: