Transcript 7. Canada and the United States

7. Canada and the United States
7.1. The Canada-US Relationship
7.2. Trade and NAFTA
7.3. Defending North America
7.4. North American Security and Terrorism
7.5. Sovereignty and the Arctic
7.1. The Canada-US Relationship
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Blessed and cursed by geography?
Diplomatic
Trade
Social and cultural links
Common Infrastructure
Security and defence
7.2. Trade and NAFTA
7.2. Trade and NAFTA
• Two way trade between Canada and the US totaled
approximately $710 billion in 2008
• Two way trade across the border is valued at approximately
$1.9 to $2.2 billion per day
• Canadian exports to the US accounted for 76% of all exports
in 2008
• Canadian exports to the US generated 26% of Canada’s GDP in
2007
• US investment in Canada in 2007 totaled approximately $289
billion (57.6% of total)
Exports of goods ($ millions)
2001
2003
2005
2007
2008
Exports
420,657 400,010 453,060.1 465,408.6 489,740.5
US
352,083 330,375 368,577.3 355,475.7 369,758.8
Japan
10,124
9,785
10,470.5
10,094.6
11,874.3
6,912
7,697
9,683.2
14,762.6
14,242.1
Other EU
16,712
16,420
19,206.8
24,840.6
25,408.0
Other OECD
16,712
12,668
15,245.5
20,490.5
21,078.5
ROW
22,695
23,062
29,876.9
39,744.4
47,378.7
UK
Imports of goods ($ millions)
2001
2003
2005
2007
2008
Imports
350,682 341,832 388,210.3 415,711.5
442,567.0
United
States
Japan
254,949 239,870 259,783.3 270,319.8
280,590.2
10,572
10,644
11,214.3
11,975.1
11,614.9
UK
11,952
8,826
9,061.6
9,955.2
11,088.5
Other EU
23,197
25,982
29,285.6
32,460.6
35,431.0
Other
OECD
ROW
18,645
19,676
24,308.8
25,010.1
27,604.6
31,365
36,831
54,556.1
65,990.7
76,237.9
7.2. Trade and NAFTA
Changes in Trade Policy
7.2. Trade and NAFTA
Signed: 17 December 1992
In force: 1 January 1994
7.2. Trade and NAFTA
Signed: 17 December 1992
In force: 1 January 1994
The NAFTA Debate
The NAFTA Debate
The case for NAFTA:
• Secure access, avoid the “hub and spoke” model
• Increase trade
• Increase investment
• Preserve right to regulate
• Stimulate innovation
• Good for Canadians
• Free trade not the source of economic troubles
The NAFTA Debate
The case against NAFTA:
• US economy in decline
• NAFTA part of the neoliberal economic agenda
• Negative impact on workforce
• Loss of economic sovereignty
• Loss of cultural autonomy
• Weak environmental provisions
• The “slippery slope”
7.2. Trade and NAFTA
NAFTA Provisions (22 Chapters)
– Eliminates all tariffs on trade in goods
(exemptions)
– Liberalizes trade in services and government
tenders
– Investment protection (the notorious Chapter 11)
– Intellectual property protection
– Protection of right to adopt health,
environmental, and safety standards
7.2. Trade and NAFTA
NAFTA Provisions
Parallel Accords on Environmental and Labour
Standards:
North American Agreement on Environmental Cooperation
North American Agreement on Labour Cooperation
7.2. Trade and NAFTA
NAFTA Provisions
Parallel Accords on Environmental and Labour
Standards:
North American Agreement on Environmental Protection
North American Agreement on Labour Cooperation
Dispute Resolution Mechanism
Free Trade Commission; Arbitral Panel; Scientific Review
Panel
7.2. Trade and NAFTA
Evaluating CUSFTA, NAFTA, and “Free Trade”
Overall assessment
Who benefits? Who does not?
Is CUFTA/NAFTA the only variable?
Evaluating Free Trade
Trade
• Between 1989 and 2002, Canadian exports rose by 221
percent, and imports by 162 percent
• Exports rose from 25.7% of GDP in 1989 to 45.5% of GDP in
2000. Imports increased from 25.7% of GDP in 1989 to 40.3%
in 2000.
• Between 1985 and 2002 US-Canada trade grew from US$116
billion to US$420 billion
• The US became a larger market for Canadian manufactured
products than the Canadian market (53% of manufactured
products exported to US)
Evaluating Free Trade
Investment
• Between 1996 and 2002 C$ 102 billion in investment
came to Canada from the US
• The stock (or share) of US investment in Canada rose
from 12% of GDP in 1989 to 20% of GDP in 2001
• US investment in Canada fell as a percentage of total
foreign investment in Canada (from 70% in 1989 to
65% in 2001)
Evaluating Free Trade
Industrial Productivity
• Huge manufacturing transition: 47% of all plants in
existence in Canada in 1988 (accounting for 28% of
all jobs in Canada) had closed by 1997. Meanwhile,
39% of all plants in Canada in 1997 (21% of all jobs)
did not exist in 1988.
• Productivity did increase by 14% per hour (but rose
by 52 percent in the US and 53 percent in Mexico),
so relative gains did not materialize
Evaluating Free Trade
Jobs and Wages
• Huge layoffs in 1989-1991: in the manufacturing
sector, one in five workers lost their jobs
• Canadian Centre for Policy Alternatives tracked
largest 47 Canadian corporations after FTAs: 11
increased jobs (28,073) 36 cut (216,004).
• The workforce of 39 corporations was cut by 100,000
(14.5 %) in the years following NAFTA
• Unionization rates in manufacturing declined from
45.5% in 1988 to 32.4% in 2002
Evaluating Free Trade
Access
• Still many trade disputes and the US still uses
its legal system to harass and penalize
Canadian exports
• Dispute mechanism has no enforcement
capacity, and disputes take years to resolve
Evaluating Free Trade
Social Issues
• Canadian social model remains different in social
support, health care, insurance, education
• However, there has been some convergence
between the US and Canada in some social indicators
• While Canada still spends more on social programs
and public services relative to the US, the gap has
been narrowing
• Income inequality has risen in Canada
7.2. Trade and NAFTA
Canada – US Trade Disputes:
– Agriculture (wheat, sugar, dairy products,
potatoes)
– In 1997 Ethyl Corp (MMT)
– In 1998 S.D. Myers (PCBs)
– Sun Belt Water (water exports)
– In 1998 Canadian Loewen Group
– In 1999 Methanex (MTBE)
– Softwood Lumber
7.2. Trade and NAFTA
The Softwood Lumber Dispute
– At issue since 1982: subsidies
– The 1986 dispute
– The 1996 SLA (expired 2001)
– The 2001 dispute
– 2003-2005 NAFTA and WTO rulings
– July 1 2006 SLA
7.2. Trade and NAFTA
Provisions of the 2006 SLA:
– Seven year agreement (can be terminated
after three years)
– US returns 4 billion in subsidies
– Ban on further US trade actions against
Canada
– Restriction on Canadian SL exports if prices
fall below certain levels
7.2. Trade and NAFTA
The Future of NAFTA
• Future of North American trade now linked to the
North American security
• Widening of membership?
• Renegotiation?
• A Customs Union?