The trade relationship of the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
with
Canada is the largest in the world. In 2016, the goods and services trade between the two countries totalled $627.8 billion. U.S. exports were $320.1 billion, while imports were $307.6 billion. The United States has a $12.5 billion trade surplus with Canada in 2016.
Canada has historically held a trade deficit with the United States in every year since 1985 in net trade of goods, excluding services.
The trade relationship between the two countries crosses all industries and is vitally important to both nations' success as each country is one of the largest trade partners of the other.
The trade across
Ambassador Bridge, between
Windsor, Ontario
Windsor is a city in southwestern Ontario, Canada, on the south bank of the Detroit River directly across from Detroit, Michigan, United States. Geographically located within but administratively independent of Essex County, it is the southern ...
and
Detroit, Michigan
Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at th ...
, alone is equal to all trade between the United States and
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
.
Before NAFTA
Canadian politicians have debated
free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold eco ...
since 1866.. Trade with the United States was the main topic in the 1911
Canadian Federal Election
This article provides a summary of results for Canadian general elections (where all seats are contested) to the House of Commons, the elected lower half of Canada's federal bicameral legislative body, the Parliament of Canada. The number of ...
, where it was proposed by the Liberal Party of Canada and opposed by the Conservative Party, as well as in the 1984 and 1988
Canadian Federal Election
This article provides a summary of results for Canadian general elections (where all seats are contested) to the House of Commons, the elected lower half of Canada's federal bicameral legislative body, the Parliament of Canada. The number of ...
, where the Progressive Conservative Party promoted a free trade agreement, opposed by the Liberal Party. Although there were many bilateral agreements reducing tariffs, a free trade agreement was not reached until the
Canada–United States Free Trade Agreement
The Canada–United States Free Trade Agreement (CUSFTA), official name as the Free Trade Agreement between Canada and the United States of America (french: links=no, Accord de libre-échange entre le Canada et les États-Unis d'Amérique), wa ...
in 1987.
North American Free Trade Agreement (NAFTA)
The
Canada–United States Free Trade Agreement
The Canada–United States Free Trade Agreement (CUSFTA), official name as the Free Trade Agreement between Canada and the United States of America (french: links=no, Accord de libre-échange entre le Canada et les États-Unis d'Amérique), wa ...
laid the groundwork for a multilateral and multicultural agreement between the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
,
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
, and
Canada, called the
North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(NAFTA), which has helped to increase trade amongst all three member countries. Although there is some dysfunction between the countries, especially in the area of
automobiles
A car or automobile is a motor vehicle with wheels. Most definitions of ''cars'' say that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people instead of goods.
The year 1886 is regarded as t ...
and
agriculture
Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to ...
, the trends are negligible as the agreement has arguably been a boon for all nations involved.
Disputes
There are several disputes arising from the bilateral trade between the two nations. The United States placed Canada on its
Special 301 Report intellectual property
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, c ...
rights enforcement (although under the mildest category of "rebuke"). Other products from Canada under dispute include
softwood
Scots Pine, a typical and well-known softwood
Softwood is wood from gymnosperm trees such as conifers. The term is opposed to hardwood, which is the wood from angiosperm trees. The main differences between hardwoods and softwoods is that the ...
lumber, beef, tomatoes, and other agricultural products.
The heightened border security as a result of the 2001
terrorist
Terrorism, in its broadest sense, is the use of criminal violence to provoke a state of terror or fear, mostly with the intention to achieve political or religious aims. The term is used in this regard primarily to refer to intentional violen ...
attacks has been an issue of concern for businesses in both countries. The issue has become less of a concern since the attacks with the development of new technology, registration, training, and fewer rules. However, a midpoint estimate of US$10.5 billion costs to businesses in delays and uncertain travel time have affected trade.
One ongoing and complex trade issue involves the importation of cheaper
prescription drugs
A prescription drug (also prescription medication or prescription medicine) is a pharmaceutical drug that legally requires a medical prescription to be dispensed. In contrast, over-the-counter drugs can be obtained without a prescription. The rea ...
from Canada to the United States. Due to the Canadian government's
price controls
Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
as part of their
Single-payer medical system, prices for prescription drugs can be a fraction of the price paid by consumers in the unregulated U.S. market. While laws in the United States have been passed at the national level against such sales, specific state and local governments have passed their own legislation to allow the trade to continue.
Softwood lumber
The Canada–United States
softwood
Scots Pine, a typical and well-known softwood
Softwood is wood from gymnosperm trees such as conifers. The term is opposed to hardwood, which is the wood from angiosperm trees. The main differences between hardwoods and softwoods is that the ...
lumber dispute is one of the most significant and enduring trade disputes in modern history. The dispute has had its biggest effect on
British Columbia, the major Canadian exporter of softwood lumber to the United States.
The heart of the dispute is the claim that the Canadian
lumber
Lumber is wood that has been processed into dimensional lumber, including beams and planks or boards, a stage in the process of wood production. Lumber is mainly used for construction framing, as well as finishing (floors, wall panels, wi ...
industry is unfairly
subsidized
A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
by the federal and provincial governments. Specifically, most timber in Canada is owned by provincial governments. The price charged to harvest the timber (the "
stumpage
Stumpage is the price a private firm pays for the right to harvest timber from a given land base. It is paid to the current owner of the land. Historically, the price was determined on a basis of the number of trees harvested, or "per stump". Cur ...
fee") is set administratively rather than through a competitive auction, as is often the practice in the United States. The United States claims that the provision of government timber at below market prices constitutes an unfair subsidy. Under U.S. trade remedy laws, foreign goods benefiting from subsidies can be subject to a
countervailing duty tariff to offset the subsidy and bring the price of the product back up to market rates.
Proposals
Since the September 11th attacks, there has been a debate on whether there should be further
North America
North America is a continent in the Northern Hemisphere and almost entirely within the Western Hemisphere. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South America and the C ...
n integration. Some have proposed the adoption of the Amero under the
North American Currency Union as the official
currency of North America. While these discussions are more prevalent in Canada, studies have shown that United States citizens would not object to economic integration. Former U.S.
Ambassador
An ambassador is an official envoy, especially a high-ranking diplomat who represents a state and is usually accredited to another sovereign state or to an international organization as the resident representative of their own government or sov ...
Paul Cellucci stated, however, "Security trumps trade" in the United States, and so as long as Canada is a possible point of entry for terrorists, such integration seems unfeasible.
By sector
Energy
The strength of the Canada–U.S. relationship is demonstrated by impressive bilateral trade of approximately $1.9 billion a day, along the world's longest undefended border. Energy trade is the largest component of this cross-border commerce. Canada has the third-largest oil reserves (after
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the List of Asian countries by area, fifth-largest country in Asia ...
and
Venezuela
Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in t ...
), thanks to its
oil-sands resources. The United States has historically been Canada's only foreign market for natural gas, oil, and
hydropower
Hydropower (from el, ὕδωρ, "water"), also known as water power, is the use of falling or fast-running water to produce electricity or to power machines. This is achieved by converting the gravitational potential or kinetic energy of a wa ...
. In 2010, almost 100% of Canada's exports in these commodity classes were destined for the United States. Canada is the largest foreign supplier of crude oil (25% of oil imports) and natural gas to the United States. In short, this energy relationship has enhanced U.S. energy security and provided Canada with a steady demand for its energy exports.
However, this highly integrated U.S.–Canada energy relationship may change dramatically in the near future. U.S. oil and natural gas production and reserves are expanding because of growing
tight oil
Tight oil (also known as shale oil, shale-hosted oil or light tight oil, abbreviated LTO) is light crude oil contained in unconventional petroleum-bearing formations of low permeability, often shale or tight sandstone.
Economic production from ...
and
shale gas
Shale gas is an unconventional natural gas that is found trapped within shale formations. Since the 1990s a combination of horizontal drilling and hydraulic fracturing has made large volumes of shale gas more economical to produce, and some a ...
developments. Furthermore, the
U.S. Energy Information Administration (EIA) forecasts slower growth in U.S. oil and natural gas consumption in the coming decades until 2035. Consequently, the United States no longer appears to be an unlimited market for Canadian energy, leaving Canada seeking new export destinations.
Both Canada and the United States are increasingly reliant on foreign investment to develop their resource sectors, with Asia serving as an important source of capital. Asian investors initially focused on project investments as minority joint venture partners but are showing increasing interest in owning production companies. Asian investors' objectives for investing in the North American energy sector include both attractive financial returns on investment as well as an interest in North America as an energy supply source for their economies. The expanding energy investment and trade between North America and Asia can be mutually beneficial.
Agriculture (Dairy)
Another source of tension has been Canada's protection of their dairy farmers. Canada is the only industrialized country in the world to still use a "supply management system" for regulating the supply of dairy products.
The US sees the system as protectionist because after an annual import quota has been reached, a large tariff (240% for milk, 300% for butter) is applied to any additional imports.
Media and culture
Because
English
English usually refers to:
* English language
* English people
English may also refer to:
Peoples, culture, and language
* ''English'', an adjective for something of, from, or related to England
** English national ide ...
is the majority language in both countries, and accents and dialects on both sides of the border are (relatively) similar and is a variety of
North American English (as compared to the British or Australian English), both high culture and mass media are easily traded. Both countries have minority-language media—Canada's large
francophone
French became an international language in the Middle Ages, when the power of the Kingdom of France made it the second international language, alongside Latin. This status continued to grow into the 18th century, by which time French was the l ...
population and the United States' large
hispanophone
Hispanophone and Hispanic refers to anything relating to the Spanish language (the Hispanosphere).
In a cultural, rather than merely linguistic sense, the notion of "Hispanophone" goes further than the above definition. The Hispanic culture is t ...
population—as well as immigrants and indigenous language speakers, but cultural trade mostly concerns English-language media.
The major difference is that the U.S. media market is more than 15 times larger, meaning that the Americans enjoy greater
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables a ...
. Historically, this has always been the case since the 19th century, when Canada was flooded with American books, but the beginning of Canada's
cultural protectionism dates to the 1920s, when Canada's radio market was dominated by American broadcasts, leading
cultural nationalists to form the
Canadian Radio League, which
lobbied
In politics, lobbying, persuasion or interest representation is the act of lawfully attempting to influence the actions, policies, or decisions of government officials, most often legislators or members of regulatory agencies. Lobbying, which ...
for a publicly funded broadcaster to compete with U.S. stations. In the 1950s, television experienced a similar dispute, with Canadian stations airing U.S. programming and U.S. stations broadcasting into Canada, leading to the creation of
CBC Television. Since the 1970s, Canadian radio and television stations have been required by law to air a minimum percentage of
Canadian content
Canadian content (abbreviated CanCon, cancon or can-con; ) refers to the Canadian Radio-television and Telecommunications Commission (CRTC) requirements, derived from the Broadcasting Act of Canada, that radio and television broadcasters (inclu ...
.
One source of tension is a difference in philosophy: the Canadian position is that its culture is a prerequisite for safeguarding its nationhood and should thus be excluded from free trade agreements, whereas Americans negotiators see media as just another commodity. This difference came to light during the dispute over "split-run" magazine during the 1990s. Split-runs are magazines produce a slightly modified edition (say, for a Canadian market) and resell much of the advertising space to Canadian advertisers. Canadian publishers argued that the Americans were poaching all their advertising revenue without producing substantial Canadian content. American publishers and the U.S. government countered that banning "split-runs" was illegal under
international trade law
International trade law includes the appropriate rules and customs for handling trade between countries. However, it is also used in legal writings as trade between private sectors. This branch of law is now an independent field of study as mo ...
. There have also been disputes over the generous
tax credits
A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "disc ...
that the Canadian federal and provincial governments give to television and film productions. This, combined with a weaker
Canadian dollar
The Canadian dollar (symbol: $; code: CAD; french: dollar canadien) is the currency of Canada. It is abbreviated with the dollar sign $, there is no standard disambiguating form, but the abbreviation Can$ is often suggested by notable style g ...
caused American filmmakers to complain during the 1990s that "
runaway productions" were hurting American employment in the film industry, especially in California.
See also
*
NAFTA's effect on United States employment
*
North American Forum on Integration
*
North American SuperCorridor Coalition
*
Security and Prosperity Partnership of North America
References
{{DEFAULTSORT:Canada-United States Trade Relations
Foreign trade of the United States
Foreign trade of Canada