VAST DISPARITY IN BORDER PRICES 

There is much wailing at border walls. It's not only happening all along the U.S. -- Canada border but the differences are even more acute between Hong Kong and China (which gives Hong Kong among the world's lowest food prices), West and East Berlin (where there isn't much to buy) and between the U.S. southern border and Mexico (where the new international gray markets operates). Whenever low labour costs, differences in productivity or higher taxes create an imbalance, such differences occur.

For British Columbia's Lower Mainlanders, the magnet is irrestible. Postage at half price, gasoline 60 percent lower, milk 70 percent cheaper and cheese 80 percent off can attract almost anyone. In many cases, farther south the spread enlarges not diminishes.

In California, recently, my wife bought a fax machine for her business. US $500. It was a top-of the-line Panasonic. Haven't seen anything like it here for under $1100. The next week I was in Florida. Caribbean Communications, who operate a small chain of stores, were offering a Panasonic Model EB-3500 cellular phone (only weighs 19 oz.), with full roaming mobility for US$625.

Bell South, a Florida phone company, for signing up with their service (a must for the phone connection) gives a US$500 REBATE! Net cost is $125. This seemed like a great bargain. The very next day I saw another ... offered completely free. Just sign for the service.

Computer hardware and software also offered in these highly competitive markets at low prices. Miami may be the most competitive U.S. market because they sell so much right in Miami for people carrying (smuggling?) it into South America. Remember that computers come into Canada totally duty-free since Jan. 1, 1990, under the new Canadian-U.S. Free Trade Act.

The 13.5 percent Canadian Federal Sales Tax is still charged, but the savings, even with the lower Canadian dollar, are substantial. It's gone beyond a matter of nationalism or supporting Canadian labor. Even strong union defenders, who strike here for higher wages, are joining in cross-border buying sprees.

What can those businesses on the "wrong side" of the border in such matters do? The reality is not much. Yet. Some can pressure Revenue Canada to carry out the letter of the law and make fellow citizens pay the one or two percent duty, but that duty drops every year, and alienates former customers ... a temporary measure at best. The reason is in the system. A politically-sensitive milk-marketing board which knows it is setting the price for milk and cheese at a far higher price than that charged across the street (in another country) will feel a backlash sooner or later. Not only the price but also the licensing system makes the cost of everything going into that milk so much higher.

A government which raises taxes, not only on gasoline but on everything taxed along the way in the refining process, is asking for eventual trouble. Even government-run post offices charge more for postage because they continually give in, for political reasons, to wage and restrictive operating conditions that double what-would-be the normal cost of postage. Couriers and the fax machine are teaching them about those moves. The up-to-10,000 British Columbians a day who are crossing the border into Point Roberts for gas, milk and cheese are certainly doing their bit to educate governments.

What to do? Take advantage of the situation. Buy where prices, consistent with quality, are the lowest. The hype about not being CSA approved, even when such applicances are Underwriter Lab approved, is merely hype. These standards are set by Canadian companies that set up the CSA and control the Canadian manufactured appliance market. They are not based on any international standard. Eventually, the poor, money-losing shop owners on one side of the border will show such a reduction in income taxes due, that governments will see the error of their ways. It's a shame they have to carry the load, but it was ever thus.

Can we trust government? No. Remember China.

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