Sequestration: Canadians will feel the pinch from automatic U.S. spending cuts

Canada will feel the sting if U.S. Congress fails this week to avert an array of massive, mandated spending cu …Are you having trouble getting your head around this thing called sequestration?

America's TV talking heads and political bloggers are getting people south of the border jittery as the first round of automatic federal budget cuts — about US$85 billion — take effect later this week.

But why should we care up here in Canada? Here's why. Do you like to scoot across the border to shop for bargains? Well, scooting's out. Expect longer waits — maybe hours — to get through customs as border points face reduced staffing.

Planning an air trip? Closure of some U.S. air traffic control centres will tangle airline schedules and force cancellation of flights, which given the interlinked nature of the world's air-travel system, will inevitably ripple into Canada, The Canadian Press reports. U.S. customs pre-clearance centres at airports could also be closed down.

Businesses are expected to feel the effect as well with a reduction in customs services as 8,000 positions are cut to meet government-mandated budget targets.

[ Related: Canadian travellers and businesses to feel the pain from U.S. sequestration ]

The much-touted Canada-U.S. Beyond the Border program, aimed at streamlining the movement of goods and people, is also in jeopardy.

“This is such a large reduction in spending that nothing is going to go untouched, and things that are not really essential as far as the U.S. government is concerned will be on the chopping block,” former Liberal cabinet minister John Manley, head of the Canadian Council of Chief Executives, told CP.

The Canadian Manufacturers and Exporters warned its members last weekend that the U.S. and Canada may not have worked out any contingency to cope with the sequestration cuts, CP said.

“If they’re not talking, that’s not good, and I can’t get anyone to tell me whether they’re working out a contingency plan,” Birgit Matthiesen, the organization's Washington-based senior adviser, said Sunday.

[ Related: Sequester: 'It's your fault ... No, your fault!' ]

Canadian companies involved in U.S. public-sector work could also be hurt, Matthiesen said.

“The loss of federal contracts will be huge,” she said. “Canadian businesses participate in a lot of bidding for lucrative federal government contracts in the U.S., so there will be that shrinking of business.”

According to The Associated Press, Manley also warned that the Canadian defence industry could be hit hard by planned cuts to defence spending.

Sequestration requires the U.S. government to slash spending by $1.2 trillion by 2021, with the first cuts taking effect this Thursday.

The plan was put in place last year on the assumption that the prospect of pain from automatic cuts would force the gridlocked U.S. Congress to come to terms with President Barack Obama's White House on a compromise plan involving spending reductions and tax increases.

But as the deadline loomed partisan politics continued to reign and no one is certain what impact the sequestration cuts will have.

(Photo courtesy The Canadian Press)