A Look at Canada-US Relations

Fight, Work and Play

Our Trade: Some Facts

• Over 8 million U.S. jobs depend on trade and investment with Canada

• Canada is the top export destination for 35 states• Canada is the United States’ largest and most secure

supplier of energy: oil, natural gas, electricity and nuclear fuel

• 400,000 people cross the Canada–U.S. border daily• 40% of trade is intra-firm• 1/3 of Canadian exports to U.S. contain U.S. 'content’

Source Canadian Embassy in Washington

Canadian Trade with Illinois• Over 300,000 jobs in Illinois depend on trade and investment

with Canada• Canada is your top export market – bigger than Illinois next four

destination markets put together• CN Rail, BMO Harris Bank run their US operations from Chicago• Canadian investment creates 25,000 jobs in Illinois• 70% of Canadian crude exports to the USA comes to the midwest

market• A million Canadians visited Illinois last year spending $300 million

Source Canadian Consulate Chicago

Supply Chain Dynamic … We Make Stuff Together

Oil

Observations

• Allies, Partners and Friends• Deep economic integration – more than trade we

make stuff together• Primary Canadian objective is access for goods,

people and services• Regulations have replaced tariffs as main trade

barrier• 9-11 and US security concerns/paranoia and old-

fashioned protectionism are ongoing Canadian challenges

Canada and Mexico

Mexico• NAFTA (1994) and the Canada-

Mexico Partnership (2004), Joint Action Plan (2010) focused on fostering competitive and sustainable economies; protection of citizens of both countries; enhancement of people-to-people contacts and the projection of the partnership regionally and globally.

• Interparliamentary association, North American Summits

• 2500 Canadian companies currently operating in Mexico, including giants such as Bombardier, Scotiabank, Magna, Blackberry, Goldcorp and CP

• 17,000 temporary agricultural workers and 10,000 students

And play• Second most important tourist

destination for Canadians with some 1.8 million visits per year vs 130,000 from Mexico, low in part because of visa restriction applied in 2009.

Observations

• Trade, Investment and Tourism continues to grow from Canadian side

• Mexicans see no natural fit for investment in Canada• Canadian Visa restriction hampers Tourism, Trade,

Investment• Government to Government Institutions need to be

revitalized• Canada can do much more in technical assistance on

policing and judicial training as we have done on election reform

NAFTA worked…

Canadian Trade Partners

US Trade Partners

U.S. Trade with North America, 1992-2012

AAGR is Average Annual Growth Rate. Sources: TradeStats Express, U.S. Census Bureau, OECD, WTO, Industry Canada

Trade by Truck and Rail

but it peaked in 2000

US thickens the borders

…,with new security at the crossings

Cost of Delays & Missed Opportunities

Annual cost of delays and border security restrictions: $27 billion (2.7% of trade in 2008)

Border transfer cost of ‘drayage’ (prohibiting trucks) $616 million in 2008 (or 15% of volume of trade)

Cost of building a wall on the southern border: $2.1 billion

Annual cost of cabotage (Jones Act): $656 million

Sources: Robert A. Pastor, The North American Idea (New York: Oxford University Press, 2011); Alex James Appiah, Applied General Equilibrium Model of North American Integration with Rules of Origin, Doctoral Dissertation for Simon Fraser University, November 1999; Michael Hart, “Trading Up: The Prospect of Greater Regulatory Convergence in North America,” (U.N. Economic Commission for Latin America and the Caribbean, April 2007).

Annual Cost of “rules of origin” procedures approx. $35.7 billion

Annual cost of divergent regulations totals 2-10 % of production costs

The Public Gives Priority to North America

Public Wants More Cooperation on Transnational Policy Issues

U.S. Support for Common Border Policies

Observations

• Asymetrical: US is the hub with Canada and Mexico trying to avoid being spokes

• More dual bilateralism than trilateralism• NAFTA has baggage (unfairly) as symbol for outsourcing

and job loss• Potential is still great: Resources, including Energy, Market,

Labour with improving Transportation grids make for increasingly integrated North American supply chains

… Trilateralism needs renovation thus Trans Pacific Partnership

Comparing North America with TPP and TTIP: What should be our priority, strategically and tactically?

In 2010, the three North American countries accounted for 90% of the gross domestic product of TPP countries excluding Japan, and 82% of U.S. exports to TPP countries go to our two neighbors, Mexico and Canada

Trans Pacific Partnership (TPP) includes Australia, Brunei Darsussalam, Canada, Chile, Malaysia ,Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.Note: TPP GDP without the U.S. is $2.594 trillionSources: APEC and North America data from StatsAPEC, GDP and total trade for Western Hemisphere and TPP from World Bank dataBank, US exports data from US Census Foreign Trade division

NAFTA…it still works