The long-lasting Canada-U.S. trade partnership represents the largest and most successful in the world. These closely bordered friends collaborate on economic recovery and prosperity. Peter Van Loan, a leading figure in Canada’s Progressive Conservative Party and a community activist, provides his perspective.
No trading relationship on the planet matches the Canada-United States partnership when it comes down to trust, wealth creation and compatibility. Together, we have traded our way to greater prosperity.
As North America emerges from the dark shadow of global economic downturn, this friendship is more important than ever.
Over the course of decades, Canada and the United States built a relationship based on shared values, not to mention the advantage of geographic proximity. We have created the largest and most successful trade relationship in the world.
As trend spotters dwell on emerging markets far away, it is worth reminding that it takes only a tiny percentage climb in Canada-USA trade to produce huge economic and job growth. Indeed, the two countries depend on one another: More than eight million U.S. jobs depend on Canadian trade. Canadian companies employ more than half a million Americans. Further, these Canadian companies have invested in our closest neighbour’s communities. Last year, even in the midst of the global recession, more than US $1.4 billion in goods and services crossed the Canada-U.S. border each day.
Trade Activity Based on Trust
The nature of our integrated supply chains means that rising trade usually produces benefits and jobs on both sides of our border. That trade is politically appealing: Our populations view each other as trusted fair dealers and free traders that play by the rules.
Canada is the top merchandise export destination for 34 of the United States and, by far, it represents the most popular export destination for small and medium-sized U.S. firms, which form the still-strong backbone of America’s economy. In fact, Canada buys more goods and services from the United States than Germany and China combined. Just think of all the jobs, prosperity and opportunity generated by this kind of trade activity.
Making Things Happen
But our import-export relationship is just one part of an ongoing story. Through the years, our two countries have become part of each other’s supply chains. Our firms are “making things” together, with products developed and manufactured using inputs, expertise and innovations that come from both sides of the border.
In many sectors, the bulk of Canadian exports are actually inputs into American supply chains. Often, Canadian production hubs are closer to major American markets than U.S. production sites. Of Canada’s 20 largest cities, 17 are within an hour and a half of the Canada-U.S. border.
Businesses on both sides utilize this geographic advantage. Close investment ties demonstrate how two economies support each other. Two-way investment reached nearly $525 billion in 2009, a strong performance, given the global economic downturn.
Canada: A Strong Investment Partner
Investment plays an increasing role in driving economic opportunities. As a business and investment partner, Canada has a lot to offer our closest neighbour, specifically:
- An open and attractive free-enterprise environment, ranked by the Economist Intelligence Unit as the best place to do business in the G-7 over the next five years.
- The strongest fiscal position in the G-7, with the lowest debt and the lowest deficit.
- Low corporate taxes, with the lowest overall tax rate on new business investment in the G-7.
- The fastest rate of economic growth in the G-7 which will continue into the future, according to the International Monetary Fund.
- A skilled workforce, with the highest proportion of post-secondary graduates among Organization of Economic Co-operation and Development countries.
All of the above doesn’t each touch on Canada’s quality of life, or its vibrant environment for innovation. Nowhere else in the industrialized world could you find a more generous research and development tax-incentive program, or a stronger commitment to good governance and the rule of law.
Canada is an open, welcoming, free-market alternative, where American firms can prosper and thrive. Close commercial ties translate into real jobs for Canadians and Americans. From trade and investment, to jobs and the success of our manufacturing sector, it’s clear that Canadian companies have a big stake in the U.S. economy and a play a key role as our countries continue to recover.
Also, Canada sees a number of opportunities to grow our partnership in the future. Energy is a good example. Canada is already a cornerstone of North America’s energy grid. We are the United States’ largest source of energy. The U.S. imports more oil, natural gas, nuclear power and hydroelectric power from Canada than from any other country. In addition to making oil-production cleaner and greener, Canada is rapidly expanding production of energy from renewable sources – including solar, tidal, hydro, wind, biomass and geothermal power. Our countries are already working together to develop tomorrow’s energy sources.
Last year, Canada’s Prime Minister Stephen Harper and U.S. President Barack Obama announced a Canada-U.S. Clean-Energy Dialogue. Our countries will work together on several critical issues, including clean energy research and the development of a more efficient electrical grid.
The message is clear: As America seeks out new and trusted sources of energy, it need look no further than its northern neighbour. Canada can fuel America’s future. Our government recognizes that our trade and investment relationship with the United States is Canada’s most important.
Addressing Ongoing Challenges
Like any sophisticated, prosperous and wide-ranging partnership, ours is not without its share of challenges. We have always taken a collaborative and mutually respectful approach to working through these issues. Earlier this year, U.S. Trade Representative Ron Kirk and I agreed to meet twice a year to discuss those challenges. We agree that our economic recovery depends on our co-operation and collaboration. The regular meetings give us the opportunities to maintain a strong and effective partnership.
The “Buy American” provisions in the U.S. Recovery Act are a good example of the types of challenges that we dealt with. The “Buy American” provisions threatened the integrated supply chains that our countries have developed over the decades. Businesses on both sides of the border fought hard against these provisions. They knew that especially during this time of fragile economic recovery, we must keep our doors open to trade and investment.
Working together, our nations negotiated reciprocal commitments that secured exemptions from the provisions – Canada is the only country in the world to receive this exemption. We made sure that free trade and co-operation could continue to drive economic recovery and maintain jobs for our workers. And we continue working together on a more comprehensive bilateral procurement agreement for the longer term.
When Canada hosted the G-20 Summit in June, world leaders agreed that free trade, not protectionism, hold the key to recovery. Our government knows that Canada’s partnership with the United States holds the potential that will create jobs and prosperity in communities on both sides of the border.
In working together, Canadian and U.S. governments, stakeholders and businesses will build on the successes already achieved with the North American Free Trade Agreement. We will create a stronger, innovative and increasingly competitive North American marketplace.
Peter Van Loan, MP, York-Simcoe, developed diverse experience through involvement in the Progressive Conservative Party and the community, and as a lawyer. He was elected as a Member of Parliament in 2004 and appointed Minister of Public Safety in 2008.