Is Canada the US's Leading Trade Partner?

Politicians in Canada have discussed free trade since 1866, prior to the NAFTA. The Liberal Party of Canada proposed trade with the United States, while the Conservative Party opposed it. This issue also dominated the Canadian federal elections of 1984 and 1988, when the Progressive Conservative Party pushed a free trade agreement and the Liberal Party opposed it. A free trade deal was not achieved until the Canada–United States Free Trade deal in 1987, despite numerous bilateral agreements lowering barriers.

Agreement on Free Trade across the Americas (NAFTA)

The North American Free Trade pact (NAFTA), a multinational and multicultural pact involving the US, Mexico, and Canada, was made possible by the Canada-US Free Trade Agreement and has contributed to an increase in trade between the three parties. Even while there is some dysfunction among the nations, particularly in the auto and agricultural sectors, the trends are small because the agreement has undoubtedly benefited all of the participating countries.

Conflicts

A number of disagreements stem from the two countries' bilateral trade. Canada was included in the United States' Special 301 Report about intellectual property rights enforcement, but with the mildest "rebuke" possible. Aside from softwood timber, other products disputed to be from Canada are meat, tomatoes, and other agricultural products.

Concerns about increased border security following the terrorist attacks of 2001 have been raised by companies in both nations. Since the assaults, the problem has been less of a concern thanks to the advancement of new technology, registration, training, and lax regulations. However, trade has been impacted by delays and unclear travel times, estimated to have cost corporations US$10.5 billion at midpoint.

The importation of less expensive prescription medications

into the US from Canada is one persistent and complicated trade issue. Prices for prescription pharmaceuticals can be far lower than what consumers would pay in the unregulated U.S. market because of price limitations implemented by the Canadian government as part of their single-payer healthcare system. State and municipal governments in the United States have enacted laws of their own to permit the trade to continue, despite federal prohibitions prohibiting such transactions.

Softwood lumber

One of the biggest and longest-lasting trade disputes in modern history is the softwood lumber dispute between the United States and Canada. British Columbia, Canada's top exporter of softwood lumber to the US, has been most impacted by the dispute.

The core of the disagreement is the assertion that the federal and local governments of Canada unfairly support the lumber business. More specifically, province governments own the majority of Canada's timber. Rather of being determined via a competitive auction, as is frequently the case in the United States, the cost of harvesting the timber (sometimes known as the "stumpage fee") is determined administratively. The United States maintains that the government's supply of timber at rates below market value amounts to an unfair subsidy. Foreign goods that receive subsidies may be subject to a countervailing tax tariff under American trade remedy laws in order to balance the subsidy and restore the product's price to market rates. Vitality

The remarkable $1.9 billion in daily bilateral trade between the United States and Canada, over the longest undefended border in the world, demonstrates the strength of their partnership.

The biggest part of this cross-border trade is energy trading

Thanks to its oil-sands resources, Canada possesses the third-largest oil reserves (after Saudi Arabia and Venezuela). Historically, Canada's only overseas market for hydropower, oil, and natural gas has been the United States. In 2010, the United States accounted for nearly all of Canada's exports in these commodity classifications. With 25% of all oil imports, Canada is the top foreign provider to the US market for both natural gas and crude oil. In summary, this energy partnership has improved the security of American energy supplies and given Canada a consistent market for its energy exports.

That closely interwoven energy relationship between the United States and Canada could, however, soon undergo a significant shift. Growing tight oil and shale gas developments are driving up U.S. output and reserves of natural gas and oil. Additionally, until 2035, the U.S. Energy Information Administration (EIA) projects a slower rate of increase in the country's use of natural gas and oil. As a result, it doesn't seem like the US is an endless market for Canadian energy, hence Canada is looking for new export markets.

The resource sectors of the United States and Canada are becoming more and more dependent on foreign investment to grow, with Asia being a major source of funding. Asian investors are becoming more interested in controlling producing companies, but at first they were mostly interested in project investments as minority joint venture partners. Attractive financial returns on investment and a desire to use North America as a source of energy for their economy are the two main reasons Asian investors invest in the North American energy business. There may be reciprocal advantages to the growing energy-related commerce and investment between North America and Asia.