When Americans think of Canada, visions of expanses of wilderness or holiday locations may come to mind. Few, however, on either side of the border, realize the size and power of the economic relation between the United States and its northern neighbour.
The Web site of the Embassy of the United States in Canada, under the section U.S.-Canada Economic Relations, relates: “The U.S. and Canada enjoy the world’s largest and most comprehensive trading relationship, which supports millions of jobs in each country… The United States and Canada share a $1.2 trillion bilateral trade and investment relationship with a highly integrated supply chain” (see canada.usembassy.gov).
North Americans often consider China, Latin America or Europe as primary trading partners, but note the following from the embassy Web site: “U.S. exports to Canada exceeded total U.S. exports to China, Japan, South Korea and Singapore combined in 2011.”
The United States is by far Canada’s largest market, absorbing more than 70 percent of goods and services exported, while Canada is the second largest source of imports for the U.S. The Embassy’s Web pages go on to demonstrate the size of economic activity at just one border crossing: “The $120 billion in annual trade that crosses the Ambassador Bridge between Detroit, Michigan and Windsor, Ontario is greater than all U.S. trade in goods with the United Kingdom.”
From the Web site of the Government of Canada’s Washington Trade office, a 2012 study reports that trade and investment with Canada directly supports more than eight million U.S. jobs. The study also reports: “35 states count Canada as their top export market” (see www.canadainternational.gc.ca/washington). Likewise, in Canada, millions of jobs are linked to this huge bilateral relation.
However, this situation is changing. A study by Toronto Dominion Economics concluded that Canada’s economic reliance on the U.S. has been in decline for the past ten years. In 2002, 84 percent of Canada’s exports went to the U.S., but by 2020 it will be 67 percent. Since 2002 Canadian exports to China have doubled and exports to Europe are up 83 percent. The article cites a number of factors including the rising value of the Canadian dollar, as well as growing difficulties in trade as a consequence of a “thickening” U.S. border (“Canada-U.S. Trade: North American Cousins Decoupling Economically,” Huffington Post, August 20, 2012).
Growing border restrictions (fuelled in part by the mistaken notion that the September 11, 2001 terrorists who attacked the World Trade Center and the Pentagon came through Canada) were further intensified by recent “Buy American” policies put forward by the U.S. government, which neglected to recognize the integrated manufacturing supply chain in North America—and, as a result, caused losses even to American-owned businesses operating in Canada. More recently, political and business interests in Canada have been energized to seek other markets in the wake of U.S. decisions to restrict pipeline construction that would have increased imports of Canadian oil.
The recession of 2008 made many Canadians aware of the risks and dangers of being so dependent on one large market to the south—especially one whose economy was labouring under significant debt. As a result, since 2009, Canada has looked to broaden its trading relationships: “Canadian officials have signed or brought into force six free trade agreements and are currently negotiating 14 free trade agreements, including one with the European Union, expected to be concluded sometime this year. A joint study by the European Commission and the Government of Canada estimated that once in force, such a free trade deal could increase Canadian exports to Europe by an additional 20 percent by 2014” (ibid.).
The European Union openly supports this arrangement, as the EU is already Canada’s second largest trading partner. Canada has concluded free-trade agreements with European non-EU economies, including Iceland, Liechtenstein, Norway and Switzerland, which came into force on July 1, 2009. An agreement under discussion with the EU will be more comprehensive than any previous agreement, including services, investment, intellectual property and tariff elimination.
The Canadian Prime Minister, Mr. Stephen Harper, has chosen to promote future economic development based on a policy of fiscal prudence and massive development of global trade in both resources and manufactured products. He is supported by a strong Canadian banking system, strictly regulated by government policy. The formula is winning adherents such as German Chancellor Angela Merkel, who offered high praise for this new economic direction during her recent visit to Ottawa. “She [Merkel] praised Canada’s budget discipline, promotion of economic growth and “not living on borrowed money” as models for the 17-nation euro region. ‘This is also the right solution for Europe’, Merkel said” (Bloomberg News, August 16, 2012).
Canada is also looking to Asia—and to China in particular. In February 2012, Prime Minister Harper made a state visit to China, where he discussed the nations’ mutual economic relationship. Canada is resource-rich, and China is resource-hungry. Canada, the largest supplier of energy to the U.S., is also anxious to increase energy exports. Chinese companies now own about 10 percent of the massive Alberta oil sands development as well as other resource and manufacturing interests. “He [Harper] said the two have also committed to complete a joint study this spring that will look at where Canada’s and China’s economies are ‘complementary’. ‘It will lead us to discussions to examine the feasibility and some of the potentials of a free-trade agreement’ Harper said” (“Harper in China: free trade agreement with China in Canada’s sights?,” Toronto Star, February 11, 2012).
Canada’s government and its businesses are reticent to continue solely to depend on the U.S. marketplace to provide long-term stability in trade and economic activity. Hence Canada is enhancing economic relations across the Atlantic and the Pacific. One may hope that this present trend does not lead to estrangement of these two friendly North American trading giants. Their natural wealth has long been the envy of much of the world. Their prosperity is sometimes assumed to be the result of industriousness, a large resource base and strategic location. Yet long ago they were warned not to assume this wealth was because of their efforts.
God tells His people to remember His blessings: “And you shall remember the Lord your God, for it is He who gives you power to get wealth” (Deuteronomy 8:18). As King David stressed in Psalm 15, relations predicated on honest dealings on all sides are always beneficial. It is vital to remember the more important aspects of life, dealing with one another honourably, decently and respectfully, in accordance with the principles God outlines for a happy, prosperous and peaceful life. Whether for individuals or nations, these principles are the path to success and happiness.
These nations would be most wise to make a serious effort to overcome trade disagreements, and not permit a God-given relation to drift apart. It is very important that Canadians and Americans continue to value the benefits of their unique relationship, realizing that their prosperity is really dependent on following the moral and ethical principles that God laid out for mankind and that desire for more material gain should not override friendship. In fact, their relation is more than friendship—it is actually a family relationship. These great nations are largely the descendants of two brothers. To learn more about this connection, please request our free booklet: The United States and Great Britain in Prophecy.