Exporting to Canada#1 Market for U.S. Exports

Export Opportunities for U.S. Export Opportunities for U.S. CompaniesCompanies

Dana M. HicksHonorary Canadian Consul-Charlotte

Charlotte, NCApril 14, 2010

Canadians and Americans share common Canadians and Americans share common challengeschallenges

Global financial challengesGlobal financial challenges

The emergence of powerful economic competitors such as The emergence of powerful economic competitors such as China and IndiaChina and India

The need to stimulate economic growth and promote job The need to stimulate economic growth and promote job creationcreation

The need to maintain securityThe need to maintain security

2

But we also share mechanisms that can But we also share mechanisms that can help us respond to these challenges…help us respond to these challenges…

Both countries are highly industrialized, well established Both countries are highly industrialized, well established democraciesdemocracies

Both are leading members of numerous important Both are leading members of numerous important economic and political organizations, including the G8, economic and political organizations, including the G8, APEC and NATOAPEC and NATO

Both are partners in a North American Free Trade Both are partners in a North American Free Trade Agreement that has nurtured one of the largest and most Agreement that has nurtured one of the largest and most complex economic partnership in the worldcomplex economic partnership in the world

3

And we have an established relationship And we have an established relationship upon which we can build…upon which we can build…

Canada is by far the largest buyer of US goods: over USD Canada is by far the largest buyer of US goods: over USD $260 Billion in 2008.$260 Billion in 2008.

More than 8 million U.S. jobs are supported by trade with More than 8 million U.S. jobs are supported by trade with Canada (2008)Canada (2008)

More than 16,000 company locations in the U.S. are More than 16,000 company locations in the U.S. are Canadian owned: they employ 557,000 Americans (2009)Canadian owned: they employ 557,000 Americans (2009)

For every $1 worth of goods China buys from the U.S., For every $1 worth of goods China buys from the U.S., Canada buys almost $4 ($3.77).Canada buys almost $4 ($3.77).

More than 50% of our bilateral trade moves by truck. More than 50% of our bilateral trade moves by truck. …we …we can use this to strengthen both countries.can use this to strengthen both countries. 4

Canada-U.S. tradeCanada-U.S. trade

CanadaCanada’’s trade in goods s trade in goods and services with the and services with the

U.S. is more than twice U.S. is more than twice the size of its trade with the size of its trade with the rest of the world.the rest of the world.

The U.S. trades more with Canada than with any

other country.

5

Distribution of U.S. Merchandise Trade 2008

17.7%

12.0%

10.8%6% 4.5%

48.9%

Canada

All Others

Japan

China

MexicoGermany

Source: Statistics Canada – October 2009

REGIONAL SHARES OF CANADA’S TRADE IN GOODS AND SERVICES, 2004 AND 2008 (PERCENT)

Exports Imports Total Trade

2004 2008 2004 2008 2004 2008

World 100.0 100.0 100.0 100.0 100.0 100.0

US 78.5 72.8 67.1 62.4 73.1 67.7

EU 7.7 9.3 11.2 11.6 9.3 10.5

Japan 2.3 2.4 2.9 2.6 2.6 2.5

OtherOECD

3.6 4.5 5.8 6.0 4.6 5.3

Non-OECD

8.0 11.0 13.0 17.4 10.3 14.1

6

Canada and the U.S. enjoy the largest Canada and the U.S. enjoy the largest bilateralbilateral trading partnership in the world...trading partnership in the world...

Source: Statistics Canada

Two-way trade in goods and services totaled Two-way trade in goods and services totaled USD $676.3 billionUSD $676.3 billion in 2008: trade was flowing between the two countries at a in 2008: trade was flowing between the two countries at a

rate of about USD $1.8 billion dollars a day!!!rate of about USD $1.8 billion dollars a day!!!

U.S. to Canada

Canada to U.S.

Our Solid FoundationOur Solid Foundation Almost a fifth of our Almost a fifth of our

merchandise trade is in merchandise trade is in automobiles, trucks and automobiles, trucks and parts: one of the world’s parts: one of the world’s largest single integrated largest single integrated industrial value chains;industrial value chains;

More than half of total More than half of total merchandise trade, merchandise trade, including a wide including a wide assortment of materials assortment of materials and products (i.e. plastics, and products (i.e. plastics, machinery, medicines, machinery, medicines, equipment), is used as equipment), is used as inputs for other goods; inputs for other goods;

Close to 29% of Canada – Close to 29% of Canada – U.S. trade in goods U.S. trade in goods represent intra-firm trade represent intra-firm trade according to the U.S. according to the U.S. Bureau of Economic Bureau of Economic AnalysisAnalysis

… our trade is based on the fact that we make things

together!7

Geographic Geographic proximityproximity

Many Canadian Many Canadian production hubs are production hubs are closer to key US closer to key US markets than markets than corresponding corresponding American centres.American centres.

Of CanadaOf Canada’’s 20 s 20 largest cities, 17 are largest cities, 17 are within 100 miles of within 100 miles of the border. the border. Approximately 90% Approximately 90% of Canadians live of Canadians live within this distance.within this distance.

Mexico City

1000 km

500 km

Los Angeles

Denver

Houston

Atlanta

Seattle

Miami

New York

Boston

PhiladelphiaWashingtonBaltimoreDetroit

Chicago Cleveland

St. Louis

Pittsburgh

Milwaukee

San Francisco

St. John's

CalgaryVancouver

ReginaHalifax

TorontoMontréal

WinnipegCharlottetown

Edmonton

VictoriaOttawa

Windsor

QuébecFredericton

Saskatoon

8

Our ConnectivityOur Connectivity

Rail

From anFrom an iinfrastructure nfrastructure perspective, perspective, the border is the border is not obvious not obvious

9

Road

Power

Physical integration supports a huge trade Physical integration supports a huge trade in energy…in energy…

2008 was the 172008 was the 17thth consecutive year in which Canada has been consecutive year in which Canada has been the largest supplier of energy to the U.S. The single most the largest supplier of energy to the U.S. The single most reliable and secure energy partner to the United States. reliable and secure energy partner to the United States.

In 2008, energy exports to the U.S. equalled 92.9% of Canada’s In 2008, energy exports to the U.S. equalled 92.9% of Canada’s total energy exportstotal energy exports..

The value of crude and non-crude oil supplied to the U.S. by The value of crude and non-crude oil supplied to the U.S. by Canada was USD $76.4 billion (2.5M bl/day). This trade will Canada was USD $76.4 billion (2.5M bl/day). This trade will continue well into the future since Canada contains an continue well into the future since Canada contains an estimated 178 billion barrels of recoverable oil, second only to estimated 178 billion barrels of recoverable oil, second only to Saudi Arabia. Saudi Arabia.

10

North American Gas Pipeline Grid

North American Crude Oil Pipeline

Grid

The Canada-U.S. relationship creates jobs The Canada-U.S. relationship creates jobs for Americans…for Americans…

For 35 of the 50 states, For 35 of the 50 states, Canada is their most Canada is their most important export important export market;market;

These states are not These states are not confined to the border, confined to the border, but are spread across but are spread across the entire country;the entire country;

It is estimated that It is estimated that Canada-U.S. trade Canada-U.S. trade supports more than 8 supports more than 8 million U.S. jobs. (2008)million U.S. jobs. (2008)

11

88 Canadian companies have operations in 88 Canadian companies have operations in North Carolina.North Carolina.

208,500 Jobs in NC are supported by 208,500 Jobs in NC are supported by Canada-U.S. trade.Canada-U.S. trade.

12

Canada was North Carolina’s top export market in 2008

North Carolina-Canada Trade FactsNorth Carolina-Canada Trade Facts

Top exports to Canada 2008Top exports to Canada 2008 Motor vehicle parts, except engines..............$384 millionMotor vehicle parts, except engines..............$384 million Computers..................................................$283 millionComputers..................................................$283 million Medical, ophthalmic & orthopedic supplies....$256 millionMedical, ophthalmic & orthopedic supplies....$256 million Furniture & fixtures.....................................$144 millionFurniture & fixtures.....................................$144 million Power shovels............................................$130 millionPower shovels............................................$130 million

North Carolina-Canada Trade FactsNorth Carolina-Canada Trade Facts

Top imports from Canada 2008Top imports from Canada 2008 Medicine, in dosage.......................................$351 Medicine, in dosage.......................................$351

millionmillion

Softwood lumber...........................................$188 Softwood lumber...........................................$188 millionmillion

Synthetic rubber & plastics.............................$173 Synthetic rubber & plastics.............................$173 millionmillion

Basic plastic shapes & forms..........................$129 Basic plastic shapes & forms..........................$129 millionmillion

Organic chemicals.........................................$124 Organic chemicals.........................................$124 millionmillion

North Carolina-Canada Trade FactsNorth Carolina-Canada Trade Facts

Top trading provinces 2008Top trading provinces 2008 Ontario...........................................................$5.7 Ontario...........................................................$5.7

billionbillion

Quebec..........................................................$1.3 Quebec..........................................................$1.3 billionbillion

Alberta.........................................................$413 Alberta.........................................................$413 millionmillion

Manitoba......................................................$348 Manitoba......................................................$348 millionmillion

British Columbia............................................$297 British Columbia............................................$297 millionmillion

56 Canadian-owned companies operate 56 Canadian-owned companies operate in at least 291 locations in in at least 291 locations in South CarolinaSouth Carolina. .

95,250 Jobs in SC are supported by 95,250 Jobs in SC are supported by Canada-U.S. trade.Canada-U.S. trade.

16

Canada was SC second-largest export market in 2008

South Carolina-Canada Trade FactsSouth Carolina-Canada Trade Facts

Top exports to CanadaTop exports to Canada Automobiles................................................$299 millionAutomobiles................................................$299 million Motor vehicle parts, except engines..............$167 millionMotor vehicle parts, except engines..............$167 million Paper & paperboard....................................$137 millionPaper & paperboard....................................$137 million Unshaped plastics.......................................$104 millionUnshaped plastics.......................................$104 million Air conditioning & refrigeration equipment....$102 millionAir conditioning & refrigeration equipment....$102 million

South Carolina-Canada Trade FactsSouth Carolina-Canada Trade Facts

Top imports from Canada 2008Top imports from Canada 2008 Petroleum & coal products.............................$190 Petroleum & coal products.............................$190

millionmillion

Synthetic rubber & plastics............................$121 Synthetic rubber & plastics............................$121 millionmillion

Organic chemicals...........................................$80 Organic chemicals...........................................$80 millionmillion

Motor vehicle parts, except engines..................$79 Motor vehicle parts, except engines..................$79 millionmillion

Yarn, thread, cordage, twine & rope.................$79 Yarn, thread, cordage, twine & rope.................$79 millionmillion

South Carolina-Canada Trade FactsSouth Carolina-Canada Trade Facts

Top trading provincesTop trading provinces Ontario..........................................................$2.9 Ontario..........................................................$2.9

billionbillion

Quebec........................................................$872 Quebec........................................................$872 millionmillion

Alberta.........................................................$220 Alberta.........................................................$220 millionmillion

Nova Scotia..................................................$217 Nova Scotia..................................................$217 millionmillion

British Columbia............................................$214 British Columbia............................................$214 millionmillion

Canada is a significant investor in the U.S.Canada is a significant investor in the U.S.

Canadian-owned businesses in the United States

48.8% of Canada’s foreign direct investment has been located in the U.S. - the single largest destination of Canadian

investment abroad.

Geographic Distribution of Outward FDI Stock from Canada, 2008

20

And our partnership is part of a larger And our partnership is part of a larger North American context….North American context….

The U.S. is also Mexico’s largest trading partnerThe U.S. is also Mexico’s largest trading partner

Mexico is the U.S.’s 3Mexico is the U.S.’s 3rdrd largest trading partner after largest trading partner after Canada and China Canada and China

Mexico is Canada’s 5Mexico is Canada’s 5thth largest trading partner largest trading partner

NAFTA is clearly working: Under NAFTA merchandise trade NAFTA is clearly working: Under NAFTA merchandise trade between Canada, the US and Mexico has tripled, reaching between Canada, the US and Mexico has tripled, reaching US $946.1 billion in 2008.US $946.1 billion in 2008.

NAFTA has emerged as one of the world’s largest NAFTA has emerged as one of the world’s largest economic regions (28.0% of global GDP).economic regions (28.0% of global GDP).

… … these advantages can help us weather the current period these advantages can help us weather the current period of global uncertainty.of global uncertainty.

21

The size and diversity of our relationship The size and diversity of our relationship hides a significant constraint…hides a significant constraint…

Most of our trade flows through only a few border crossingsMost of our trade flows through only a few border crossings22

Yet the number of people using the border is Yet the number of people using the border is still significant…still significant…

Air: 20.8 million

Trucks: 11.5 million

23

Commitment to a safe and secure Commitment to a safe and secure Canada – U.S. borderCanada – U.S. border

Canada and the U.S. have a Canada and the U.S. have a long history of cooperation and long history of cooperation and consultation on security consultation on security measures at our shared bordermeasures at our shared border

Canada is investing in border Canada is investing in border infrastructure to increase infrastructure to increase security and economic security and economic prosperityprosperity

24

Our goal is to facilitate the Our goal is to facilitate the smooth flow of legitimate smooth flow of legitimate goods and people while goods and people while ensuring a secure borderensuring a secure border

The United States and Canada The United States and Canada share the following border goals:share the following border goals:

Develop joint threat and risk assessmentsDevelop joint threat and risk assessments

Advance initiatives that manage risk while Advance initiatives that manage risk while

facilitating the movement of legitimate goods and facilitating the movement of legitimate goods and

peoplepeople Endeavour to share informationEndeavour to share information

Where necessary, ensure we have the separate Where necessary, ensure we have the separate

systems to protect the bordersystems to protect the border Expand integrated law enforcement operationsExpand integrated law enforcement operations

Leverage resources between our 2 countriesLeverage resources between our 2 countries

Canada and the U.S. are cooperating to Canada and the U.S. are cooperating to ensure the border remains a highway and ensure the border remains a highway and

not a barrier…not a barrier… FAST (fast movement of pre-approved eligible goods by FAST (fast movement of pre-approved eligible goods by

truck) truck) NEXUS (special program for frequent travelers) NEXUS (special program for frequent travelers) Harmonized commercial processing for commercial Harmonized commercial processing for commercial

shipments shipments

(e-manifests)(e-manifests) Implemented the "24-Hour Rule" for marine shipments Implemented the "24-Hour Rule" for marine shipments

destined to North America (advanced cargo notification)destined to North America (advanced cargo notification) Improved infrastructure and border processing timesImproved infrastructure and border processing times

SMART borders will enhance security while improving economic efficiency

26

ConclusionConclusion

In a period of profound adjustment, it is important to In a period of profound adjustment, it is important to recognize a vital source of wealth creation.recognize a vital source of wealth creation.

North American economic integration has contributed to North American economic integration has contributed to

the creation of new jobs, new economic opportunities, the creation of new jobs, new economic opportunities, and new sources of competitive advantage. and new sources of competitive advantage.

During a period of global uncertainty, our relationship is a During a period of global uncertainty, our relationship is a foundation for strengthening both countries.foundation for strengthening both countries.

Maintaining efficient physical linkages is key to our Maintaining efficient physical linkages is key to our mutual competitive advantage.mutual competitive advantage.

27