U.S. – Canada Trade:
Opportunities Through NAFTA and Beyond
Andrew I. Rudman
Office of NAFTA & Inter-American Affairs
International Trade Administration
U.S. DEPARTMENT OF COMMERCE
Northern Networks Trade Conference
Duluth, MN
October 18, 2006
TOP 10 U.S. TRADING PARTNERS
2005
$600
$400
287.9
$300
170.2
$200
243.5
138.1
S.
K
or
ea
.
U
.K
m
an
y
G
er
Ja
pa
n
in
a
Ch
ic
o
M
ex
na
da
33.8
22
22.4
27.7
$0
EXPORTS
34.8
IMPORTS
33.7
10.4
M
al
ay
si
a
38.6
nc
e
34.1
43.8
Fr
a
41.8
55.4
51.1
an
84.8
120.0
iw
$100
Ta
211.3
Ca
BILLION DOLLARS
$500
Source: U.S. Bureau of Census
U.S. EXPORTS TO NORTH AMERICA
EXCEEDING THOSE TO OTHER REGIONS
2005
NAFTA
36.7%
EU
20.6%
Canada
23.4%
Other
10.1%
Other West Hem
7.9%
Pacific Rim
24.6%
Mexico
13.3%
Source: U.S. Bureau of Census
U.S. TRADE IN PERSPECTIVE
2005
$800
$700
BILLION DOLLARS
$600
458.1
$500
$400
308.8
$300
$200
331.4
243.5
$100
138.1
186.3
$0
NAFTA
EU(25)
EXPORTS
41.8
55.4
China
Japan
IMPORTS
Source: U.S. Bureau of Census
U.S. – NAFTA TOTAL TRADE
1990-2005
800
657.1
700
612.3
602.1
789.5
713.0
627.0
BILLION DOLLARS
561.9
600
503.3
477.3
500
421.2
380.6
343.2
400
293.2
265.0
300
240.6
233.5
200
100
0
90 991 992 993 994 995 996 997 998 999 000 001 002 003 004 005
9
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
Source: U.S. Census Bureau
NAFTA TRADE IN PERSPECTIVE
 Most comprehensive Regional Trade Agreement signed by the





United States
Exports to NAFTA are outpacing rest of world
NAFTA trade has increased by over $496 billion since 1993 to
$789.5 billion in 2005
Combined trade is $2.2 billion a day between NAFTA partners,
that’s $1.5 million a minute
U.S. two-way merchandise trade with Canada and Mexico more
than exceeds U.S. two-way merchandise trade with the European
Union (25) and Japan combined
U.S. exports to Mexico are greater than U.S. exports to Mercosur
and the Andean region combined.
U.S. – CANADA TRADE
$300
287.9
256.4
230.8
216.3
$200
198.7
221.6
209.1
$150
163.4
160.9
2002
155.9
145.3
151.8
134.2
127.2
166.6
158.8
143.9
2001
168.2
211.3
189.9
178.9
169.9
114.4
$100
100.4
111.2
128.4
EXPORTS
IMPORTS
2005
2004
2003
2000
1999
1998
1997
1996
1995
$0
1994
$50
1993
BILLION DOLLARS
$250
Source: U.S. Bureau of Census
CANADA & TRADE
SHARE OF CANADIAN IMPORTS
2005
SHARE OF CANADIAN EXPORTS
2005
CHINA
1.6%
REST OF WORLD
22.6%
MEXICO
0.8%
UNITED
KINGDOM
1.9%
GERMANY
2.7%
JAPAN
2.1%
UNITED
KINGDOM
2.7%
JAPAN
3.9%
GERMANY
0.7% REST OF WORLD
9.0%
UNITED STATES
56.5%
UNITED STATES
83.9%
MEXICO
3.8%
CHINA
7.8%
Source: World Trade Atlas
CANADA & ENERGY
 In 2005, Canada had a reported 178.8 billion barrels of proven oil
reserves, second only to Saudi Arabia.
 However, the bulk of these reserves (over 95%) are oil sands deposits
in Alberta.
 Nevertheless, during January-November 2005, the top supplier in the
world of crude oil to the United States was Canada (1.6 million bbl/d).
 More than 80 percent of U.S. natural gas imports come from Canada,
mainly from the western provinces of Alberta, British Columbia, and
Saskatchewan.
Canada enjoys a vigorous electricity trade with the U.S., and the
electricity networks of the two countries are heavily integrated.
Source: U.S. Department of Energy
NAFTA SUCCESSES
 LEVELED THE PLAYING FIELD
 CANADA: Duty-free in 1998
 MEXICO: Virtually duty-free; average Mexican tariff has fallen
from 10% to 2%
 all tariffs to be eliminated by 2008
 STIMULATED TRADE GROWTH
 U.S. exports to NAFTA partners have grown by 133%
 For Canada up 110%
 for Mexico up 188%
MINNESOTA & TRADE
MINNESOTA & TRADE
NAFTA: Exports from Minnesota to Canada & Mexico reached $4.1
billion in 2005, an increase of 101% since 1993 when exports were $2.1
billion.
NAFTA: Over 28% of Minnesota’s exports go to the NAFTA region.
CANADA: Canada is Minnesota’s #1 export market 24.4 percent of
its exports go to Canada. In 2005 it exported $3.6 billion.
CAFTA-DR: Exports from Minnesota reached $81.4 million in 2005.
U.S. Peru TPA: Exports from Minnesota reached $19.8 million in
2005.
U.S.-Colombia TPA: Exports from Minnesota reached $38.9 million.
SHARE OF MINNESOTA’S MERCHANDISE EXPORTS , 2005
28 PERCENT WENT TO NAFTA
JAPAN
6.0%
CHINA
5.0%
IRELAND
9.3%
REST OF WORLD
51.6%
NAFTA
28.1%
Source: U.S. Bureau of Census
The SPP- What Is It?

The Goal: ensure North America
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Best and safest place to live, work and do business
Maintains NORTH AMERICAN ADVANTAGE in era of global
sourcing
Builds on the NAFTA, P4P, and border initiatives to:

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Better protect citizens from man-made and natural threats
Promote safe and efficient movement of people and goods
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The SPP consists of an economic and a security component

Based on the principle that our common prosperity depends on
our mutual security

Expands economic opportunities by reducing barriers and making
our businesses more competitive in the global marketplace
The SPP- What Is It?

The SPP is meant to:

Cut red tape, lower costs for manufacturers by
eliminating unnecessary barriers

Enhance our mutual efforts to:
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improve our quality of life,
protect our environment,
improve food safety and consumer choice,
combat infectious diseases, and
develop responses to cross-border man-made/natural
disasters
Economic (‘Prosperity’) Component
Working Groups


Manufactured Goods (DOC)

Lower production costs for North American manufacturers by
eliminating unnecessary regulatory barriers, ensuring
compatibility of regulations and by eliminating redundant testing
requirements

Provide consumers with cheaper, safer, and more diversified
and innovative products
The Other Nine:
 E-Commerce and ICT (DOC)
 Energy (DOE)
 Movement of Goods (USTR)
 Transportation (DOT)
 Food and Agriculture (USDA)
 Business Facilitation (DOS)
 Financial Services (Treas.)
 Environment (DOS)
 Health (HHS)
Security Component Working Groups
(DHS)

Secure North America from External Threats
 Traveler and Cargo Security, and Bio-protection

Prevent and Respond to Threats within North America
 Aviation and maritime security, law enforcement,
intelligence cooperation, and protection, prevention
and response

Further Streamline the Secure Movement of Low-Risk
Traffic across our Shared Borders
 Develop and implement strategies to combat threats,
such as terrorism, organized crime, migrant
smuggling and trafficking
Some Accomplishments to Date
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Uniform in-advance electronic exchange of cargo manifest
data (maritime, railroad and motor carriers)
50% Reduction of Detroit/Windsor waits
Consumer Product Safety Agreements
Food Safety Coordinating Task Force
Harmonizing risk assessment mechanisms, and
establishing protocols to detect fraud and smuggling
Ongoing R.O.O. liberalization- $30 bln in goods affected
NASTC Strategy (steel)
US-Canada PulseNet MOU
Creation of avian/pandemic influenza coordinating body
Mexico adoption of low-sulfur fuel standard
2006 Initiatives

Five SPP ‘Cancun’ priorities:
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Smart, secure borders
Energy security
Emergency management
Avian and Pandemic Influenza
North American Competitiveness Council
North American Competitiveness Council
(NACC)

Membership- 10 private sector representatives from each country

U.S. Secretariat- Council of the Americas and U.S. Chamber of
Commerce

Organization varies in each country

Purpose: provide recommendations on N. American competitiveness that
could be addressed through the SPP

Value of high-level private sector input

Recommendations AND solutions to SPP Ministers
Next Steps

NACC priorities to Ministers

SPP Ministers Meeting early 2007

Working groups to continue existing
projects and identify new deliverables
Why Canada First?
•
•
• Common language
• Culture
• Canadians are very familiar with
U.S. products and services
•
• Geographic proximity
•
• Congruent time zone
• High standard of living
• Supportive Government
• Roaring Canadian Dollar
•US$ 1.00 = C$ 1.1357
•
Highly developed transportation
infrastructure
Sophisticated
telecommunications
infrastructure integrated with
the U.S.
Stable, mature financial markets
No restrictions on the movement
of funds into or out of the
country
Efficient Marketing Channels
Understanding Canada
Your key to making a loonie or a toonie north of the border
• Realize the significance of the U.S.-Canada trading relationship
• In 2005, two-way trade amounted to US $479 billion - up 12% from
2004 and is larger than the sum of 15 European Union countries
• Look at regional differences in Canada
• Canada and the U.S. are similar in many ways, but understanding
what makes Canada different and unique is important for U.S. exporters
• Look to the U.S. Commercial Service for assistance in understanding
the Canadian market and selling your products or services in Canada
80% of Canada’s Population
Understanding the
Differences
A relatively small and dispersed
Canadian population
Culture
Metric
system
Labeling
Taxes
Best Prospects for U.S. Exports to Canada (2006)
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Sector
Automotive Parts & Services (APS)
Electronic Power Systems (EPS)
Building Products (BLD)
Plastic Materials/Resins (PMR)
Oil/Gas Field Machinery (OGM)
Computers/Peripherals (CPT)
Computer Software (CSF)
Telecommunications Equipment (TEL)
Medical Equipment (MED)
Agricultural Machinery and Equipment
(AGM)
Water Resources Equipment/Services
(WRE)
Security/Safety Equipment (SEC)
Sporting Goods/ Recreational
Canadian Market Entry Strategies
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APPOINT AGENT
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APPOINT DISTRIBUTOR
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FORM STRATEGIC ALLIANCES
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ESTABLISH BRANCH OFFICE IN CANADA
ITA Can Help
Commercial Service Canada
Products and Services
• Gold Key Service
• Market Research
• International Partner Search
• Single Company Promotion (SCP)
• Platinum Key Service
• Trade Missions, DealMakers
• Business Service Provider (BSP)
Upcoming Trade Schedule
Trade Events scheduled from 2006 – 2008 include:
• Industrial/Maritime Security Event
• Canadian Solid Waste & Recycling Expo
• Meet the Buyers Seminar
• Plastics Executive Service Trade Mission
• Smart Building Seminar
For a complete listing of all trade events occurring from
2006 – 2008, please refer to our website.
http://www.buyusa.gov/canada/en
Why Monitor and Enforce Trade Agreements?
 Trade Agreements increase market access for U.S. exporters.
 Important to all stakeholders that existing trade agreements
are being enforced.
 Create confidence and support for future trade opening
agreements.
What Kinds of Barriers do
Firms Face?
 Tariff and Customs Barriers
 Rules of Origin, Certificates of Origin
 Import Licensing
 Standards, Testing, Labeling, or Certification
 Lack of Intellectual Property Rights Protection
 Government Procurement Contracts
ITA COMPLIANCE ACTION
What we do?
 Identify unfair treatment
 Form Compliance Team
 COUNTRY, INDUSTRY, AND AGREEMENT SPECIALISTS, GENERAL
COUNSEL, FOREIGN POST, OTHER – NIST, PTO
 Apply FTA/WTO Analysis
 Craft Action Plan to Resolve Issue
USEFUL LINKS
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COMMERCE NAFTA SITE – www.mac.doc.gov/nafta/index.htm
SECURITY & PROSPERITY PARTNERSHIP – www.spp.gov
US & FCS (Minnesota) - www.buyusa.gov/minnesota/
US & FCS (Canada) – www.buyusa.gov/canada/en
TRADE STATISTICS BY STATE – tse.export.gov
TRADE INFORMATION CENTER – www.trade.gov/td/tic/
NORTH AMERICAN DEVELOPMENT BANK - www.nadbank.org
NORTH AMERICAN COMMISSION FOR ENVIRONMENTAL
COOPERATION – www.cec.org
• UNITED STATES TRADE REPRESENTATIVE –www.ustr.gov
• EXPORT INFORMATION – www.export.gov
• MARKET ACCESS OR COMPLIANCE PROBLEMS –
www.tcc.mac.doc.gov
Contact Information
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Phone:
Fax:
202-482-6452
202-482-5865
Andrew_Rudman@ita.doc.gov
NAFTA Website:
www.mac.doc.gov/nafta/compliance