How Bilateral Trade Between Canada and the US Boosts Economies

Trade and Economic Relations between the United States and Canada: Opportunities and Difficulties The greatest bilateral trading connection in the world is between the US and Canada, wherein total merchandise trade (exports and imports) exceeded $429.7 billion in 2009. The North American Free Trade Agreement (NAFTA) and Canada's reliance on the U.S. market, as well as the differences in size of their economies, are the main drivers of the U.S.-Canadian relationship. Integration stems from successive trade liberalization beginning with the U.S.-Canada Auto Pact of 1965.

The bilateral free trade agreements (FTAs)



between the United States and Canada in 1988 and 1994 have hastened the progress of economic integration between the two countries. Both have prosperous industrialized economies with comparable living levels and industrial configurations. The two economies do not, however, differ in terms of size, productivity, net savings, or per capita income.

The United States' largest trading partner in terms of population is Canada. The total value of goods traded with Canada in 2009 was $204.7 billion in exports and $224.9 billion in imports. For the first time since 2007, China has surpassed Canada as the main supplier of goods to the United States, a trend that has persisted ever since. Although trade is a significant aspect of the Canadian economy, the United States is by far the country's main trading partner with Canada. The main sector of traded items consists of cars and auto parts, a highly interconnected industry as a result of free trade. Additionally, Canada is the country that exports the most energy to the US. Similar to the US, China's rise to prominence in the global economy has an impact on the Canadian economy. Through foreign direct investment, the US and Canada both hold sizable economic interests in one another.

Both nations are parties in the NAFTA



with Mexico and members of the World Trade Organization (WTO). Even while most trade is performed amicably, there are still a few problematic issues. Arbitration is being used to settle disputes pertaining to the 2006 softwood lumber accord, and Canada has requested WTO discussions regarding the criteria for country-of-origin labeling. In addition, because of concerns about the enforcement of intellectual property rights, the US has added Canada to its Special 301 priority watch list. Canada has also voiced strong opposition to the economic stimulus package's "Buy American" provisions being implemented.

The border between the United States and Canada gained prominence after the terrorist attacks of 2001. A number of bilateral efforts have been made to reduce the amount of disruption that increased border security will cause to trade. Some have expressed a renewed interest in further economic integration as a result of the border focus, either through little steps like increased regulatory cooperation or possibly broader objectives like a customs or monetary union. The main areas of interest for Congress have been trade disputes and whether or not the two countries can maintain their historical level of trade while maintaining strict border security.

In brief
The greatest bilateral trading connection in the world is between the US and Canada, wherein total merchandise trade (exports and imports) exceeded $429.7 billion in 2009. The North American Free Trade Agreement (NAFTA) and Canada's reliance on the U.S. market, as well as the differences in size of their economies, are the main drivers of the U.S.-Canadian relationship. Integration stems from successive trade liberalization beginning with the U.S.-Canada Auto Pact of 1965.

The bilateral free trade agreements (FTAs)



between the United States and Canada in 1988 and 1994 have hastened the progress of economic integration between the two countries. Both have prosperous industrialized economies with comparable living levels and industrial configurations. The two economies do not, however, differ in terms of size, productivity, net savings, or per capita income.

The United States' largest trading partner in terms of population is Canada. The total value of goods traded with Canada in 2009 was $204.7 billion in exports and $224.9 billion in imports. For the first time since 2007, China has surpassed Canada as the main supplier of goods to the United States, a trend that has persisted ever since. Although trade is a significant aspect of the Canadian economy, the United States is by far the country's main trading partner with Canada. The main sector of traded items consists of cars and auto parts, a highly interconnected industry as a result of free trade. Additionally, Canada is the country that exports the most energy to the US. Similar to the US, China's rise to prominence in the global economy has an impact on the Canadian economy. Through foreign direct investment, the US and Canada both hold sizable economic interests in one another.

Both nations are parties in the NAFTA with Mexico and members of the World Trade Organization (WTO). Even while most trade is performed amicably, there are still a few problematic issues. Arbitration is being used to settle disputes pertaining to the 2006 softwood lumber accord, and Canada has requested WTO discussions regarding the criteria for country-of-origin labeling. In addition, because of concerns about the enforcement of intellectual property rights, the US has added Canada to its Special 301 priority watch list. Canada has also voiced strong opposition to the economic stimulus package's "Buy American" provisions being implemented.

The border between the United States and Canada gained prominence after the terrorist attacks of 2001. A number of bilateral efforts have been made to reduce the amount of disruption that increased border security will cause to trade. Some have expressed a renewed interest in further economic integration as a result of the border focus, either through little steps like increased regulatory cooperation or possibly broader objectives like a customs or monetary union. The main areas of interest for Congress have been trade disputes and whether or not the two countries can maintain their historical level of trade while maintaining strict border security.

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