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Canada and United States: A look into the commercial relation of two giants

Canada and United States: A look into the commercial relation of two giants

Posted by Liliana Castaño on August 17, 2015

Giving a close look to the commercial relation between U.S. and Canada is observing the longest bilateral relation worldwide and one of the most important without a doubt. Both giants together try to stretch ties with Latin America.

From PanamericanWorld.com we have decided to give you a summary of inner-workings of this commercial partnership, based in official data. We are also going to see what conflicts have affected this long-lasting commercial relation.

The moment is just right, after China received the leaders of 21 countries (APEC), included Canada and U.S.. New commercial deals, deeper relations, and in the case of the north american countries, many analysts say that due to Barack Obama’s low popularity he is going to focus in expanding international commerce treaties.

Canada, according to the Office of the United States Trade Representative, “is the biggest commercial partner of the United States.” The latest numbers of 2013 show a commercial trade of $652 billion in goods, corresponding to the bilateral amount.

  • United States imported $300 billion in goods and another $61 billion in services from Canada.
  • $332 billion was the amount exported from U.S. to Canada in goods and $30 billion in services. More that what is exported to China, Japan and UK combined.
  • This relation generates close to 9 million jobs in the United States.
  • About 35 states in U.S. are supplied by Canadian goods.
  • The borders of both countries is crossed by about 400,000 people dayly.

 

The Department of Commerce of the United States emphasizes the opportunities offered by the open trade with Canada. It is helpful that quality standards, environmental conditions, quality of life, language and values are very close between the two countries.

19% of the goods exported from the United States go to Canada, a number that has grown exponentially since 1993, when the free trade agreement (NAFTA) was established. The top five exports to Canada are:

  1. $51 billion exports in the automobile industry.
  2. $45.3 billion in machinery.
  3. $26.7 billion in electric machinery.
  4. $24.7 billion in gas and oil.
  5. $13 billion in plastic.

The other hugely successful market for U.S. in Canada is in agricultural products, where $21.3 billion exports in 2013 make Canada the 2nd best market for U.S. in this industry.

Since the free trade agreement the amount of services exported from the U.S. to Canada grew 260%. This includes private businesses, professional and technical services, and also travel services.

The official numbers place Canada as the second biggest distributor of imported goods to U.S. in 2013. Canada supplies more than 14% of the import market. The top five imports are:

  1. $109.4 billion in oil and gas.
  2. $55.7 billion in automobiles.
  3. $19.9 billion in machinery.
  4. $10.6 billion in plastic.
  5. $10.2 billion in other products.

Canada is the largest and most secure provider of oil, gas, electricity and uranium to the U.S..

In 2009, Canada and U.S. established the Clean Energy Dialog to strengthen the bilateral collaboration in the creation of technology for clean energy and search for solutions to reduce the emission of greenhouse gases.

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90% of the energy exports from Canada go to the United States.

If you have a company in Canada that sells chocolate, meat, chicken, vegetable oil, or fruits and vegetables, then you must look closely to your closest neighbor. Not only because of the huge market opportunities in the United States, but also because the U.S. can serve as a bridge to the rest of the continent.

 

 

But not everything is fun and games

Canada criticizes the number of policies of the United States from Buy America, which requires state and federal contracts to be done with national suppliers. Canada accuses Washington of having a protectionist agenda that contradicts their constant pressure for international markets to open.

The conflict extends to the recent lawsuit by the World Trade Organization (WTO) which requires the United States to change their country-of-origin labeling, because it affect products from Mexico and Canada negatively.

Nevertheless, the pinnacle of the conflicts between these two counties may be in the export of soft wood from Canada to the United States. For now the free trade agreement is active, regardless of the complaints from U.S. producers. But the agreement ends in October of 2015, just when the construction industry in the United States is forecasted to recover full force.

The analysis signals that Canada is in a favorable position to present their objections. They ask for less protectionism, while the U.S. wonders if they are opening too much.  

 

Translated by Sebastian Llavaneras

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