TORONTO - A pointed warning from the czar of homeland security in the United States about the threat of a revitalized al Qaeda launching an attack from Canada fosters uncertainty which could damage cross-border trade, Canadian business leaders said Thursday.

Brian McCready, vice-president of Canadian Manufacturers & Exporters in Alberta and Saskatchewan, took U.S. Homeland Security Secretary Michael Chertoff to task for saying Americans will have to sacrifice economic interests in favour of increased security at the border.

McCready said the oil and gas industry in Alberta is investing significantly in security, and that Chertoff's comments are being used "as a political play rather than looking at the facts."

The comments won't be "well-received" in Alberta, because the U.S. and Canada already have a specifically designed joint-border facility in that province, he added.

"There's been definite co-operation to create a very good border crossing," he said.

A new report from American terror analysts suggests al Qaeda has been taking advantage of a safe haven in Pakistan near the Afghanistan border to restore its operational strength to levels not seen since the months since Sept. 11, 2001, the Associated Press reported Thursday.

Earlier this week, Chertoff told the Chicago Tribune that terrorists using phony documents could hit targets in Buffalo and Detroit.

Stockwell Day, Minister of Public Safety, said in a statement that "no two countries work more closely than Canada and the U.S. to ensure the safety of citizens on both sides of the border."

He added that Canadian and U.S. officials have worked together in Integrated Border Enforcement Teams and that the U.S. administration has actually lauded Canada for it's anti-terror track record.

Len Crispino, president of the Ontario Chamber of Commerce, also took issue with Chertoff's claim that Americans will have to sacrifice economic stability for national security.

"It leads to some uncertainty, and I think the worst thing for business is uncertainty," Crispino said. "It doesn't have to be one or the other. And framing the choice that way is unbalanced."

The United States is Canada's biggest trading partner and exports more products to Ontario than it does to all of China, he added.

John Winter, president of the British Columbia Chamber of Commerce, said Canadian business is already suffering significant economic setbacks because of regulations resulting from terror fears.

"I think the more he continues to talk in these blunt terms, the more it's going to erode people's confidence in our ability to manage our borders in a safe and secure way."

Winter added that tourism numbers from drivers heading north to British Columbia are down about 40 per cent, partially because of regulations that now require Americans to show passports when re-entering the U.S.

Chris Mathers, a security analyst and former US Customs Service officer, said increased U.S. fears about a terror threat launched from Canada could have serious effects on Canada's manufacturing industry.

In particular, Mathers said "just-in-time inventory," such as auto parts built in Canada that are shipped to U.S. manufacturers on a tight timeline, would especially suffer.

Since the value of "just-in-time" products are based on how quickly they can be delivered, long lines at the border could mean that American companies would turn instead to domestic suppliers rather than Canadian ones.

Mathers also said increased fears could hinder the ability of Canadians born in other countries to do business in the U.S., especially if they are from countries deemed unstable like Pakistan or Somalia.

"You may find yourself getting turned back," he said.