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of Canadian Trade with America
Canada’s Position in the Trade Relationship
The Canadian dollar, manufacturing, and value-added
For Canadian manufacturers, the export market has surpassed the domestic market in
importance. As of 1994, 55% of manufactured goods are exported, up from 40% in 1988.
Beyond favourable trade relations, there are several factors and strategies that play
into the maintenance of an export-led economy. For Canada, the traditionally low Canadian
dollar has been a gift for exporters, making Canadian products more affordable for US
But in the integrated North American economy, the low dollar also makes paying Canadian
workers more costly. The scenario is particularly visible in high paying professional
sports like hockey, where National Hockey League (NHL) teams in Canada are hard-pressed
to compete with US-based teams because paying with devalued Canadian dollars makes everything
that much more expensive. It is important to note that this scenario is also played
out in other human-resource based industries, and between 1988 and 1994, 17% of Canadian
manufacturing jobs disappeared.
In this way, the ‘value-added’ sector of the Canadian economy (i.e. labour intensive
industries) is thought to lag behind. While it is obvious that Canada’s competitive
advantage lies in its wealth of natural resources, shipping products elsewhere to be
processed, developed, and sold back to Canadian consumers hinders the domestic capacity
for similar productivity.
Foreign Ownership in the Canadian Economy
The low dollar and emphasis on exports also means that foreign investors are able to
buy Canadian assets at a lower cost. This trend has prevailed to the extent that Canada
has among the highest rates of foreign ownership among industrialized countries.
Similarly, concern has arisen in Canada as various groups lobby to protect Canada’s
water supply from NAFTA. Many worry that Canada’s vast supply of clean, fresh water
runs the risk of being bought up by US corporations. Sun Belt Water Inc. of Santa Barbara,
California, filed suit after losing a contract to deliver bulk shipments of Canadian
water to California when the BC government banned the export of bulk water in 1991.
While a BC court ruled against Sun Belt, the corporation has taken its case to a NAFTA