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of Canadian Trade with America
The dynamics and history of the Canada-US trading relationship
The unprotected border between Canada and the United States promotes an incredible
amount of trade. $1.2 billion (US) is traded across the border every day.
This volume has continued to grow over the past decade; two-way trade between Canada
and the United States has more than doubled in value since 1994. At about $188 billion
(US), Canada supplied 16.5 per cent of all US imports of goods and services, while Canada
bought 19 per cent of all American goods and services.
government’s Canada-US relations website boasts that, “the United States sells almost
three times as many goods to Canada, a market of 30 million people, as to Japan, a market
of over 125 million… [and] Canada is a larger market for US goods than all 15 members
of the European Union combined.”
A Brief History of Trade Across the 49th Parallel
1897: Yukon Gold Rush
- 50,000 Americans move north to take part in gold prospecting.
- Prime Minister Wilfrid Laurier loses the national election because his platform
proposes free trade with the US. The colonies in British North America had first signed
treaty (another term for free trade) with the Americans in 1854. The Americans
terminated the arrangement ten years later. Many American protectionists and annexationists
believed that the loss of the treaty would cause severe economic turmoil in the British
colonies and thus force them to join the United States. But the reciprocity arrangement
became a rallying point for Canadian nationalists and the opposition defeated Laurier
under the slogan, "No truck or trade with the Yankees."
1930s: Closer Ties
- William Lyon Mackenzie King, frustrated with British interference, sought to take
advantage of the power and growth of the US economy. On the other side of the border,
President Theodore Roosevelt encouraged an improvement in relations with Canada. In
1936, Roosevelt visited Quebec becoming the first US President to pay an official
visit to Canada.
1940: Military Support and Integration
- In 1940, Roosevelt pledged to support Canada in the event of an attack from overseas.
That same year, Prime Minister Mackenzie King went to Ogdensburg, New York to sign
a defence agreement integrating Canada and the United States’ defence future.
Post-war 1940s: Free Trade?
- Time magazine calls Canada “the 49th state.” Mackenzie King, afraid of what he
called “US absorption,” abandons free trade negotiations.
1950s: US Foreign Investment and Control
- By 1957, Americans controlled 70% of the capital of the Canadian petroleum and
natural gas industry, and 90% of the auto industry.
1957-1963: Diefenbaker versus Kennedy
- Prime Minister John Diefenbaker fights the tide of US industry control and challenges
extensive US investment in Canada. Icy relations between Diefenbaker and Kennedy characterize
1960s: Kennedy and Trade with Cuba
- Canada asserts its own trading agenda and continues to trade with Cuba. US President
Kennedy is infuriated, especially in light of the Cuban missile crisis.
1965: Auto Pact
- The Canada-United States Automotive Products Agreement (Auto Pact) allowed for
a duty free exchange of vehicles and their parts between Canada and the United States.
The automotive manufacturing industry, thereby, employs thousands in Canada for decades
1968-1984: Pierre Trudeau
- In an era of increasing Canadian nationalism, Trudeau questions Canada's relations
with the US. On a trip to Washington in 1971, he complains about US tariffs on Canadian
exports. US President Richard Nixon expresses his opinion of Trudeau, calling him
a jerk. In 1972, Nixon returned the visit and faced anti-US demonstrations in Ottawa.
Trudeau later announces that Canada must diversify its relationships with other countries
in an effort to avoid excessive influence by the United States. By 1972, 99% of Canada’s
energy industry is foreign owned. In response, Trudeau establishes Petrocan and the
National Energy Board. The National Energy Board lasts only four years, due to undermining
1984-93: Brian Mulroney
- The tide turned again with a return to pro-American policies. In 1987, the Free
Trade Agreement is signed and is later implemented on January 1, 1989.
- In December, Mulroney, Bush, and Gotari sign the North American Free Trade Agreement
NAFTA and Dependence on the United States
Some suggest that Canada’s economy is overly dependent on demand in the United States.
While most Canadians believe that the age of ‘globalization’ has diversified Canada’s
international trade, there has been a marked increase in dependence on exports to the
December 2002 marked the tenth anniversary of the North American Free Trade Agreement
(NAFTA). Signed by former leaders Brian Mulroney (Canada), George Bush (United States),
and Carlos Salinas de Gotari (Mexico), the agreement assured that North America would
be a consolidated economic unit with the world’s only economic and military superpower
at its centre.
A CBC illustration of
Canada’s export levels includes the following tables which chart the trend toward
dependence on exports to the United States.
Border? The Americanization of Canada. CBC.ca]