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Canada/US waning relationship needs attention

The Canadian Chamber of Commerce is worried about Canada’s “waning relationship” with the US and is calling on government, business and other stakeholders to do something about it.


December 16, 2010
by PLANT STAFF

OTTAWA: The Canadian Chamber of Commerce is worried about Canada’s “waning relationship” with the US and is calling on government, business and other stakeholders to do something about it.

A Chamber of Commerce report, Strengthening Our Ties: Four Steps Toward a More Successful Canada-US Partnership, looks at how the relationship has been strained and cites trade, regulatory policies, the border, and energy security and the environment as areas that need attention.

The two countries can no longer brag of an “undefended border” with the heightened security that has followed 9/11 and the report notes trade disputes in a variety of sectors including agriculture, natural resources and intellectual property have caused increasing friction.

“To make matters worse, the Buy American policy called into question the market access on which investments have been confidently made for over 20 years,” says the report.

One area of key concern noted by the business group is the flow of goods and services across the border, which is increasingly encountering impediments arising from regulatory differences and inefficiencies that are gradually eroding the benefits of the North American Free Trade Agreement (NAFTA).

Canada/US bilateral trade totalled approximately $593 billion in 2009, or more than $1.6 billion daily. Since NAFTA, merchandise trade is up by more than 120%. And Canada is the largest export market for 35 out of the 50 US states. The report notes Canada buys more from the US than Germany, Japan, China and the UK combined, and is a larger market for the US than all of Europe.

But according to Statistics Canada trade statistics, exports to the US dropped 25% in 2009 and for the first time countries other than the US  accounted for more than a quarter of Canadian exports. US exports to Canada were also down, by 21.6%.

Despite the effects of the economic downturn, the Chamber of Commerce says this shift in trade patterns is “startling and a cause of concern.” And it says Canadian business should not necessarily expect a US recovery to mean increased export earnings.

Growing demand for energy and commodities combined with exploding US debt means the loonie will likely remain strong and high levels of unemployment carrying over into 2011 will reduce demand for Canadian exports. Add lower levels of Canadian productivity and growing competition from low-cost regions such as China and Mexico will also put more downward pressure on exports.

“At a time when the global economy is undergoing significant shifts, it’s imperative that both countries recognize the advantages of the integrated North American market,” said Chamber president and CEO Perrin Beatty. “Canada needs to develop a dedicated strategy for engagement in the US that focuses on highlighting the gains from the bilateral arrangement and promoting free trade.”

The Chamber is calling for new ideas, goals and areas of partnership to freshen up a tightly integrated relationship, making both countries more competitive.

“The key to recharging this relationship is ensuring Canada is seen as the solution to the serious economic problems the US is facing,” said Beatty. “President Obama’s call to double American exports in the next five years has been one of his few economic gestures to attract support from all sides. If America is going to achieve this ambitious goal, it’s going to be in part because of Canada.”

Click here for a copy of Strengthening Our Ties: Four Steps Toward a More Successful Canada-US Partnership.
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