Canadian National: New Screening Policies and Smart Border Practices Can Improve Security, Assure Free Flow of Goods Between the United States and Canada, Says CN's Paul M. Tellier.

Business Editors

CHICAGO--(BUSINESS WIRE)--Oct. 11, 2001

CN (NYSE:CNI) (TSE:CNR.)

The security and trade challenges of the September 11 attacks on the United States call for coordinated processing of people and freight reaching North America and "smart" new U.S.-Canada border practices, says Paul M. Tellier, president and chief executive officer of Canadian National.

Tellier, speaking to the Traffic Club of Chicago, said the U.S. and Canada must ensure the integrity of their shared border. But he said neither country can afford measures that would harm a trading partnership worth US$450 billion last year - the largest trading relationship in the world. In fact, the U.S. trades more with Canada than with any other country.

"North Americans are trying to work their way out of a potential recession. That recession will get worse if we slow down the cross-border trade that drives the economy of both countries."

Tellier said: "The time has come for the United States and Canada to give serious consideration to new measures to improve confidence in both countries that the border is secure. We should establish unified procedures and standards for processing people and freight coming to our shores."

Coordinated security for freight, for example, would entail customs processing of overseas containers destined to any point in North America at the first port of entry, regardless of whether that port is in the U.S. or Canada. Once cleared, containers would cross the international border freely, making available people and technology for security and intelligence gathering where needed most.

Such an approach would "help reduce delays at land border crossing points. It would eliminate the need for redundant inland processing and management. And our countries can do this without ceding our sovereign rights to make decisions within our respective jurisdictions."

Tellier said the two countries should also consider the following proposals for immediate implementation:

--  Aligning U.S./Canada customs policies by adopting a similar risk
    assessment and intervention process for both countries;

--  Pre-qualifying customs and immigration processes for all persons,
    freight, and carriers that pose minimal risk and have a record of
    abiding by the law;

--  Harmonizing American and Canadian customs computer systems to
    allow both countries to share their data and create a joint
    intelligence and enforcement tool;

--  Taking customs inspection of low-risk traffic to points away from
    the border, so that customs forces can concentrate attention on
    higher risk traffic at border points, and

--  Adopting gamma ray screening technology, similar to x-ray
    inspection of hand luggage at airports, that is now available for
    inspection of rail car freight.

Tellier said rail is the most secure form of land transportation. Merchandise and intermodal trains are assembled in monitored switching yards, while intermodal trains operate at high speed in a hub-to-hub environment.

Rail intermodal freight traffic would be more secure and efficient if containers or trailers were cleared at either origin or destination instead of at the border, he said. CN intermodal trains are sometimes taken apart for inspection at U.S. border points, compromising safety and security, particularly when individual container cars are removed from trains and sometimes left on unprotected sidings. With greater efficiencies, the rail intermodal system could draw more freight off highways, reducing the number of trucks lining up at border inspection stations, he said.

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, Jackson, Miss., with connections to all points in North America.