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  The World's Largest Trading Relationship
 

 

 

 

 

 

 

 

 

 


Facts on Canada/U.S. Trade1

The U.S. and Canada enjoy an economic partnership unique in the world. The two nations share the world's largest and most comprehensive trading relationship, which supports millions of jobs in each country. The relationship between the United States and Canada is the closest and most extensive in the world. It is reflected in the staggering volume of bilateral trade--the equivalent of $1.5 billion a day in goods--as well as in people-to-people contact. About 300,000 people cross the shared border every day.

In 2007, total trade between the two countries exceeded $560 billion. The two-way trade that crosses the Ambassador Bridge between Detroit, Michigan and Windsor, Ontario equals all U.S. exports to Japan. Canada's importance to the U.S. is not just a border-state phenomenon: Canada is the leading export market for 36 of the 50 U.S. States, and ranked in the top three for another 10 States. In fact, Canada is a larger market for U.S. goods than all 27 countries of the European Community combined, whose population is more than 15 times that of Canada.

The U.S. is Canada's leading agricultural market, taking 55% of its agro-food exports in 2007. However, U.S. imports of Canadian livestock products, particularly ruminants, fell drastically after the discovery of bovine spongiform encephalopathy (BSE, mad cow disease) in early 2003. Shipments of most Canadian beef to the U.S. were resumed in late 2003, and trade in live cattle under 30 months resumed in July 2005. All remaining U.S. restrictions affecting bilateral beef trade were lifted in November 2007. Canada is the largest U.S. agricultural market, primarily importing fresh fruits and vegetables and livestock products.

The U.S. and Canada enjoy the largest energy trade relationship in the world. Canada is the single largest foreign supplier of energy to the U.S.--providing 17% of U.S. oil imports and 18% of U.S. natural gas demand. Recognition of the commercial viability of Canada's oil sands in Alberta has raised Canada's proven petroleum reserves to 179 billion barrels, making it the world's second-largest holder of reserves after Saudi Arabia. Canada is planning Arctic pipelines and liquefied natural gas terminals to provide more natural gas to the North American market. Canada and the U.S. operate an integrated electricity grid which meets jointly developed reliability standards and provide almost all of each other's electricity imports.

The comprehensive U.S.-Canada Free Trade Agreement (FTA), which went into effect in 1989, was superseded by the North American Free Trade Agreement among the United States, Canada and Mexico (NAFTA) in 1994. NAFTA, which embraces more than 450 million people of the three North American countries, expanded upon FTA commitments to move toward reducing trade barriers and establishing agreed upon trade rules. It has also resolved long-standing bilateral irritants and liberalized rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the U.S. and Canada has grown by 265%, creating many new challenges for the bilateral relationship. The Security and Prosperity Partnership of North America, launched by the three NAFTA countries in March 2005, represents an effort to address these challenges and others on a continental basis.

Canada and the U.S. have one of the world's largest investment relationships. The U.S. is Canada's largest foreign investor. Statistics Canada reports that at the end of 2007, the stock of U.S. foreign direct investment in Canada was $289 billion, or about 59% of total foreign direct investment in Canada. U.S. investment is primarily in Canada's mining and smelting industries, petroleum, chemicals, the manufacture of machinery and transportation equipment, and finance.

Canada is the fifth largest foreign investor in the U.S. At the end of 2006, the U.S. Commerce Department estimates that Canadian investment in the United States was $159 billion at historical cost basis. Canadian investment in the U.S. is concentrated in finance and insurance, manufacturing, banking, information and retail trade and other services.

1. The information on this page is quoted in its entirety from text produced by the U.S. Commercial Service - United States of America Department of Commerce.  The original text as published on the internet can be viewed here and was accessed August 30/2008.