Exchange rate, regulations depress cross border retail trade

North Dakota State Roundup

Published April 1, 1995  | April 1995 issue

When North Dakota opened its stores on Sundays in 1991, Canadian shoppers poured across the border. Canadian dollars could purchase a wide variety of merchandise at reasonable prices. New hotels sprung up to accommodate the crowds, and there were no Canadian Wal-Marts. All that has changed.

Now, the Canadian dollar is down, the Canadian government discourages cross-border shopping, Wal-Mart has a growing presence in the provinces and many hotels stand empty on weekends.

"It used to be tough finding hotel rooms for business visitors on weekends, but it's not true now," says Lee Peterson, president of the Minot Area Development Corp. At the peak of cross-border shopping in 1991-1992, Canadians occupied 60 percent of Minot hotel rooms; now occupancy stands at about 20 percent Canadian, says Bret Taylor, executive director of the Minot Area Convention and Visitors Bureau. Taylor says the city once drew 15 to 20 Canadian conventions annually, but now it's more like six or seven.

In Grand Forks the picture is similar. "The Canadian impact on the regional economy has been soft," says Bob Gustafson, president of the Grand Forks Chamber of Commerce. Canadians still come, he says, but many just pass through Grand Forks on their way to Minnesota casinos and the Twin Cities' Mall of America for other entertainment.

Minot's Taylor says another loss of Canadian visitors to the region can be ascribed to changes in Canadian air travel. What were once exclusively Air Canada routes have opened up to US airlines. As a result, border residents who once drove to Minot to make US air connections can fly direct to US destinations or to US airline hubs to make connections.

But Minot businesses haven't given up on luring Canadian shoppers. Some offer up to a 30 percent discount, which amounts to accepting Canadian dollars at par, Taylor says.

As US businesses continue to promote their goods to Canadians, Canadian businesses are drawing more US shoppers to their side of the border. US Customs allows American shoppers to spend up to 48 hours in Canada and bring back $100 each in duty-free goods. In addition, Manitoba offers a total tax rebate on US purchases of Canadian goods. Since the program began in February, border crossings of US citizens at Emerson, Manitoba, are up by 50 percent, according to John Veert, general manager of Emerson Duty-Free.

Although who gets whose retail dollar remains a seesaw issue, other changes in traffic patterns may serve to boost border cities' economies.

While US Customs figures show that the Canadian personal vehicle count was down by 15.59 percent in 1994, truck traffic increased by 21.41 percent.

"We'll see more and more of that as the effects of free trade agreements take root," Gustafson says. Minot's Peterson echoes that sentiment, saying more Canadian farm equipment manufacturers see Minot as a distribution point into the US market.

Plans for an international air freight and distribution center outside Winnipeg are also under discussion. The transportation hub would serve a large portion of the Midwest and is expected to benefit communities on both sides of the border along Interstate 29.

Kathy Cobb